PRICE,  25  CENTS. 

— •->•—{■  J_  J-J  h*  $>•••>••— 

Political  Economy 


- -OF - 


—  o  o  ' 


JOHN  LORD  PECK. 


WITH  A  STATEMENT  OF  THE 


LAW  OF  JUSTICE 

-L — BETWEEN — — 

CAPITAL  AND  LABOR. 


Philadelphia  : 

Edward  Stern  &  Co.,  125  and  127  N.  Seventh  Street. 
1879. 


Po  litical  Economy 


- OF - 

Democracy. 


- BY - 

JOHN  LORD  PECK. 


WITH  A  STATEMENT  OF  THE 


LAW  OF  JUSTICE 

- BETWEEN - 

CAPITAL  AND  LABOR. 


PHILADELPHIA: 

Edward  Stern  &  Co.,  125  and  127  N.  Seventh  Street. 


COPYRIGHTED 

1879. 


PREFACE. 


IN  a  late  magazine  is  a  somewhat  remarkable  article 
upon  German  Socialism,*  in  which,  after  showing  the 
position  of  Socialism  in  the  history  of  Political  Econo¬ 
my,  and  the  contrast  of  its  economic  doctrines  with 
those  of  the  English  school,  the  writer  closes  with  this 
statement  and  prediction : 

“  A  new  problem  is  to  be  solved.  How  can  the 
principle  of  Competition  be  so  restrained  that  its  bene¬ 
ficial  results  may  be  retained,  and  its  detrimental 
workings  hindered  ?  There  is  no  country  in  the  world 
where  the  political  and  economic  conditions  are  so 
favorable  for  the  solution  of  this  problem  as  in  the 
United  States.  America  must  repudiate  the  central¬ 
izing  tendency  of  German  Economy/’  (represented  by 
Social  Democracy  which  would  give  to  the  government 
the  control  of  all  industry)  “  because  that  tendency  is 
opposed  to  the  ideas  upon  which  the  government  is 
founded ;  but,  on  the  other  hand,  another  century  of 
unrestrained  activity  of  private  enterprise  will  itself 
contradict  the  theory  of  freedom,  and  destroy  that 
government.  From  this  dilemma  must  arise  an  Amer¬ 
ican  Political  Economy, — an  Economy  which  is  to  be 
legal  rather  than  industrial  in  its  character.” 

*  By  H.  C.  Adams,  Ph.  D.  of  Johns  Hopkins  University.  Penn 
Monthly ,  April,  1879. 


4 


PREFACE. 


An  American  school  of  Economy  has  long  existed, 
having  a  purpose  to  “  hinder  the  detrimental  workings 
of  free  competition,”  at  least  in  its  international  action, 
by  legal  rather  than  industrial  means.  And  in  the 
following  pages  an  attempt  is  made  to  indicate  how,  by 
the  coming  further  development  of  American  Economy, 
further  legal  means  will  be  discovered  for  solving  the 
problem  in  such  a  way  that  the  laissez  faire  principle  will 
be  allowed  its  full  operation  to  the  individual  in  ac¬ 
quiring  wealth  sufficient  for  a  competence,  while  the 
state  shall  interfere  to  prevent  great  corporations  from 
becoming  practical  monopolies,  and  to  restrain  the  few 
who  possess  great  capitals  and  great  advantages  from 
robbing  the  many  of  their  natural  opportunities  by 
continued  accumulation. 

The  belief  that  class  distinctions  are  to  become 
permanent  and  forever  exist  in  this  country  because 
they  have  always  existed  in  other  countries,  even 
though  taught  by  genuine  friends  of  the  lower  classes, 
is  not  to  be  accepted  without  opposition.  It  is  first  to 
be  ascertained  what  can  be  done  toward  the  establish¬ 
ment  of  a  practical  as  well  as  theoretical  equality. 

This  essay  was  written  some  six  months  ago,  and 
the  prediction  above  referred  to  was  thus,  (if  the  ex¬ 
pression  is  allowable),  beginning  to  be  realized  before 
it  had  been  publicly  made. 


August ,  1879. 


The  Political  Economy 

—OF— 

Democracy. 


THE  first  school  of  Political  Economists,  and  the 
first  set  of  doctrines  relating  to  Economy,  origi¬ 
nated  in  Commerce  or  Foreign  Trade.  That  school  was 
called  the  Mercantile,  and  the  object  of  its  teachings 
was  to  bring  as  much  gold  and  silver  as  possible  into  a 
country,  and  to  send  out  as  little  as  possible  in 
return ;  not  primarily  for  the  benefit  a  plentiful  circu¬ 
lation  of  money  would  bring  to  the  masses  of  the 
people,  but  to  enrich  and  strengthen  the  state  treasury, 
the  king,  and  the  government.  The  next  school  that 
arose — the  Physiocratic — came  from  a  natural  reaction 
against  the  first,  and  represented  predominantly  the 
interests  of  Agriculture.  The  third  school  took  its 
rise  in  England  at  a  time  when  modern  industry,  hav¬ 
ing  already  gained  considerable  development,  was 
starting  into  a  new  and  more  rapid  growth  from  the 
perfection  of  the  steam  engine,  and  the  application  of 
important  machines  to  the  manufacture  of  fabrics. 
Whatever  may  have  been  the  purpose  of  its  founder, 
Adam  Smith,  the  doctrines  of  Free  Competition  and 
Non-interference  by  Government,  which  he  advocated, 
with  others  brought  out  by  his  disciples,  came  to  be  a 
set  of  ideas  representing  and  favoring  for  the  most 
part  the  interests  of  Manufacture  ; — not  manufacture 
in  its  weak  and  undeveloped  state,  but  comparatively 


6 


THE  POLITICAL  ECONOMY 


full-grown  and  with  a  consciousness  of  strength.  Eng¬ 
land  at  this  time,  after  having  encouraged  and  pro¬ 
tected  her  manufacturers  for  a  long  period,  was  fast 
gaining  the  first  place  as  a  manufacturing  country. 
Her  insular  position,  limited  territory,  and  maritime 
habits,  with  possession  of  coal  and  iron,  naturally  im¬ 
pelled  and  enabled  her  to  assume  this  leading  position. 

As  England  grew  up  to  industrial  superiority  she 
grew  into  the  adoption  of  laissez  faire  by  the  govern¬ 
ment,  and  free  trade  or  competition  between  nations  and 
individuals  as  the  first  great  truths  of  Economy.  As  ex¬ 
cessive  trade  and  manufacture,  by  its  reaction,  brought 
on  periods  of  hard  times,  in  which  the  poorest  classes 
suffered  from  destitution  and  consequent  disease,  the 
Malthusian  doctrines  of  a  limited  wagesfund ,  and  of 
the  natural  increase  of  population  faster  than  increase 
of  food-supply  to  support  it,  came  into  existence,  and 
were  accepted  by  the  teachers  of  British  public  opinion. 
As  capital,  work,  and  population  became  centralized  in 
manufacturing  towns,  and  land  passed  into  the  hands 
of  the  few  the  Ricardian  theory  of  rent ,  a  justification 
for  the  constantly  increasing  rent  of  land,  was  also  de¬ 
veloped,  accepted,  and  taught.  The  doctrine  that 
foreign  trade  would  regulate  itself,  and  that  one  coun¬ 
try  could  not  rob  another  through  its  trade,  has  in 
later  years  become  a  favorite  theory  with  the  econo¬ 
mists  of  a  country  that  possessed  the  power,  and 
wanted  the  opportunity,  to  rob  nearly  every  other  with 
which  it  might  deal.  It  was  no  less  natural  that  a 
country  possessing  abundant  capital,  and  able  by  its 
superior  industrial  development  to  draw  gold  and  silver 
from  other  countries  to  itself,  should  believe  with  un- 


OF  DEMOCRACY, 


7 


faltering  faith  in  the  necessity  and  virtue  of  a  hard- 
money  currency  under  all  circumstances,  and  look  with 
doubt  and  scorn  upon  one  based  more  or  less  upon 
credit. 

These  are  the  principal  tenets  of  the  orthodox 
British  Free  Trade  school.  Superimposed  upon  the 
ideas  of  previous  schools,  and  modified  in  some  degree 
by  later  investigations,  they  have  become  the  predomi¬ 
nant  ideas  in  Political  Economy  as  it  is  taught  in  Eu¬ 
rope  and  America  at  the  present  time.  They  are  the 
special  creed  of  Trade,  of  the  Wealth  and  Aristocracy 
that  grows  out  of  trade,  and  of  succesful  Manufacture 
controlled  by  wealth — the  doctrines  that  in  every  way 
favor  the  selfish  interests  of  Wealth,  Trade,  and  Aris¬ 
tocracy. 

Whether  a  principle  is  accepted  because  it  is  true 
— or  because  it  is  adapted  to  existing  conditions,  men¬ 
tal  or  physical,  cannot  here  be  discussed ;  but  the  stu¬ 
dent  of  Economy  can  hardly  fail  to  discover  that,  in 
regard  to  these  views  at  least,  they  have  agreed  with 
the  natural  instincts  and  wishes  of  the  classes  by  whom 
they  have  been  accepted  as  true. 

Opposed  to  the  English  system  of  ideas,  are  the 
teachings  of  the  American  School,  originated  and  led 
by  Henry  C.  Carey.  A  denomination  holding  some 
principles  in  common  with  this  exists  with  consider¬ 
able  strength  in  Germany,  and  to  some  extent  also  in 
Italy  and  France,  where  it  has  been  developed  and 
influenced  largely  by  the  writings  of  Mr.  Carey,  trans¬ 
lated  in  those  countries.  That  it,  like  the  American, 
will  continue  to  grow  and  its  influence  to  increase,  is 


8 


THE  POLITICAL  ECONOMY 


guaranteed  by  the  inductive  and  more  strictly  scien¬ 
tific  character  of  its  method,  which  is  historical,  and 
deals  with  conditions  as  they  actually  exist,  not  theo¬ 
retical  and  doctrinaire,  as  has  been  hitherto  mainly 
the  character  of  the  English  methods.  Without  claim¬ 
ing  these  branches  as  being  one  with  our  own  school, 
or  classifying  them  further,  I  will  speak  of  the  Ameri¬ 
can  system  of  doctrines  as  it  has  been  developed  and 
now  exists  in  this  country. 

Mr.  Carey  is  the  only  one  of  our  economists  who 
has  done  any  large  amount  of  original  work  in  this 
science,  though  it  is  not,  of  course,  claimed  that  he  is 
the  author  of  all  the  principles  taught  by  the  school. 
Yet  by  his  elaboration  of  them — his  own  and  others 
— and  combination  of  the  whole  into  a  harmonious 
system,  having  one  common  spirit,  purpose,  or  ten¬ 
dency,  he  has  gained  as  proper  a  title  to  them  as  Mr. 
Darwin  has  to  that  of  Natural  Selection,  or  Mr.  Spencer 
to  the  philosophy  of  Evolution.  His  great  merit  con¬ 
sists  in  having  discerned  more  clearly  than  any  other 
one  the  true  character  and  animus  of  Trade,  of  Inter¬ 
national  trade  more  especially,  and  in  having  faithfully 
exhibited  it  as  predominantly  unprincipled  in  its  nature, 
becoming  in  its  extreme  forms  of  development  indi¬ 
rect  robbery — a  sort  of  national  vampirism — a  civil¬ 
ized  and  polished  manifestation  of  the  spirit  of  War 
and  Rapine  of  former  ages — a  form  of  selfishness 
having  greater  evil  results  than  almost  any  other. 
From  this  discovery,  and  from  the  connection  between 
Trade  and  Political  Economy,  there  springs  up,  by 
natural  reaction,  a  set  of  views  taken  from  an  opposite 
standpoint,  governed  by  an  opposite  motive,  and  origi- 


OF  DEMOCRACY. 


9 


nating  doctrines  of  an  entirely  opposite  character  and 
tendency.  Mr.  Carey  thus  appears  as  the  founder  of 
a  system  which,  by  natural  outgrowth  becomes,  as 
will  be  seen  farther  on,  the  Political  Economy  of  De¬ 
mocracy. 

I  have  no  purpose  of  discussing  the  truth  or  scien¬ 
tific  value  of  either  of  these  sets  of  opposing  principles, 
nor  of  estimating  how  much  of  truth  or  error  may  be 
connected  with  any  particular  one.  I  wish  simply  to 
show,  by  contrasting  them,  what  is  their  natural  ten¬ 
dency  when  adopted  and  acted  upon  as  truths,  and 
afterward  to  glance  at  some  prospective  developments. 

Against  the  British  doctrine  of  free  trade  or  com¬ 
petition  between  nations  and  individuals,  giving  to  the 
rich,  strong,  and  skilled,  whether  individuals  or  nations, 
the  power  to  crush  and  rob  those  who  are  poorer  and 
weaker,  Mr.  Carey  opposed  that  of  Protection  to 
Home  Industry — not  a  scheme  of  duties  to  raise  rev¬ 
enue  for  a  government  or  to  sustain  some  monopoly, 
purposes  for  which  duties  have  always  been  resorted 
to — but  as  a  means  and  a  policy  to  enable  countries 
weak  in  capital,  skill,  and  industrial  development,  to 
combine  and  safely  use  their  small  capitals,  to  make 
the  most  of  what  industrial  talent  they  possess  and 
encourage  the  evolution  of  more,  to  produce  as  great  a 
variety  of  industries  as  is  practicable,  and  thus  create 
employment  for  every  kind  of  capacity,  with  the  largest 
opportunity  and  demand  for  labor.  The  argument  for 
this  is,  that  it  tends  toward  the  distribution  of  wealth 
among  the  laboring  classes  and  men  of  small  means, 
ultimately  leading  to  the  equality  of  every  country 


IO 


THE  POLITICAL  ECONOMY . 


with  every  other  in  the  production  of  all  those  commo¬ 
dities  not  dependent  upon  climate  or  peculiar  natural 
resources,  thus  abolishing  a  large  share  of  that  distant 
and  foreign  trade  which  now  goes  toward  inequality, 
by  building  up  big  fortunes  for  merchant  princes,  ship¬ 
owners,  and  railroad  kings.  Still  further,  this  policy, 
by  favoring  Labor,  enables  the  poor  man  to  get  pos¬ 
session  of  land,  thus  tending  toward  equality  in  the 
distribution  of  real  estate,  besides  giving  to  the  small 
farmer  his  best  opportunities,  by  creating  a  market  for 
his  products  in  the  vicinity  where  they  are  grown.  In 
short,  by  restricting  that  power  of  the  superior  country, 
which,  if  left  free  operates  to  crush  out  the  worker 
and  small  capitalist  of  a  weaker  nation,  Protection 
leaves  these  latter  classes  free  to  use  their  opportuni¬ 
ties,  and  to  make  such  approximation  as  they  can 
toward  equality.  In  still  fewer  words,  it  is  freedom 
for  the  weak  against  freedom  for  the  strong. 

This,  be  it  observed,  is  claimed  as  its  natural 
, tendency,  and  its  actual  operation  as  between  nations. 
But  the  logical  outcome  of  it  should  be  to  make  local 
centres  of  industry,  with  a  balance  of  agriculture  and 
manufactures,  at  every  principal  town  and  village, 
instead  of  allowing  great  manufacturing  centres  to 
grow  up,  with  their  immense  corporations,  where  the 
factory  system,  with  the  close  competition  of  both 
capitalists  and  laborers  among  themselves,  develops 
worse  evils  than  those  of  the  fishing  and  hunting 
barbarian  life,  which  has  no  industry  at  all.  Why 
does  the  policy  fail  here  ?  Because  the  smaller  com¬ 
munities  within  a  country  have  no  efficient  means  of 
resisting  the  competition  of  these  great  centres.  This 


OF  DEMOCRACY. 


1 1 

is  the  one  weak  point  in  the  plan.  Why  should  we 
need  any  more  protection  against  the  competition  of 
big  corporations  and  capitals  outside  the  country,  than 
against  those  of  Lowell  and  Lynn  within  our  borders  ? 
is  the  question  of  the  theoretical  free-trader.  And, 
aside  from  the  consideration  of  certain  national  differ¬ 
ences,  there  is  no  answer  and  can  be  none,  except  this 
— that  there  should  be  a  policy  and  action  in  the 
smaller  communities  to  assist  the  establishment  of 
their  own  manufactures,  and  that  whatever  power  they 
may  have  through  the  use  or  remission  of  local  taxa¬ 
tion,  should  be  employed  for  this  purpose,  till  a  variety 
of  industries,  with  a  balancing  agriculture,  should  exist, 
so  far  as  natural  conditions  allow,  all  over  the  country. 
This,  I  repeat,  is,  in  opposition  to  the  interests  of  big 
manufacturing  and  trading  centres,  the  natural  result 
of  logically  carrying  out  the  theory.  And  that  such 
general  distribution  of  capital  and  industry  tends 
towards  equality  in  the  possession  of  property,  is  suf¬ 
ficiently  evident. 

As  I  did  not  propose  to  defend  the  truth  of  this  or 
any  other  theory  or  doctrine,  neither  do  I  need  to  state 
in  what  ways  this  policy  may  be  abused,  what  mis¬ 
takes  may  be  made  in  applying  it,  or  how  far  it  may 
be  reconciled  with  a  certain  amount  of  international 
free  trade,  especially  between  differing  climates. 

In  opposition  to  the  English  theory  of  a  limited 
wages-fund  to  be  divided  among  the  employees,  giving 
to  them  little  or  much,  according  as  the  laboring  popu¬ 
lation  are  many  or  few  in  number,  and  making  natu¬ 
ral  increase  of  wages  impossible,  Mr.  Carey  taught 


12 


THE  POLITICAL  ECONOMY 


this  doctrine: — that  in  the  natural  growth  of  society, 
uninterfered  with  by  the  oppressions  of  the  soldier, 
trader,  slaveholder,  or  politician,  (for  these  are  all 
put  in  the  same  category),  there  is  a  constant  tendency 
to  increase  of  wealth  and  to  an  improvement  in  the 
condition  of  all  classes;  that  of  this  constantly  increas¬ 
ing  production  from  combination,  and  from  use  of 
machinery,  Capital  receives  a  share  that  increases  in 
absolute  amount,  but  decreases  in  relative  proportion 
of  the  whole ;  while  the  laborer  receives  a  share  not 
only  increasing  in  quantity,  but  in  relative  proportion 
of  the  whole  also — a  constantly  increasing  wages-fund 
both  in  amount  and  rate — thus  giving  him  increasing 
opportunity  for  improvement  of  his  condition,  the 
whole  process  being  in  harmony  with  the  natural  pro¬ 
gress  of  all  things. 

The  theory  of  rent  put  forth  by  Ricardo,  assumed 
that  Agriculture  commenced  upon  the  richest  lands, 
and  that  as  these  became  occupied  population  was 
pushed  out  upon  the  poorer  ones ;  the  necessity  of 
this  movement  giving  to  the  owner  of  the  best  the 
power  and  right  to  demand  rent  for  them.  Increase  of 
population  compels  the  cultivation  of  poorer  and  still 
poorer  soils,  enabling  the  landlord  to  increase  and  con¬ 
tinue  increasing  the  rent  in  proportion  to  natural  value 
of  the  land.  The  tendency  is  here  towards  a  steadily 
growing  inequality  of  condition,  the  land  holder  taking 
a  larger  and  still  larger  share  of  the  soil’s  produce  for 
rent,  and  leaving  to  the  laborer  a  share,  whether  as 
wages  or  otherwise,  that  is  constantly  becoming  smaller. 

Mr.  Carey,  on  the  contrary,  showed  that  Agricul- 


OF  DEMOCRACY. 


13 


ture  began,  not  upon  the  richer  soils,  but  the  more 
easily  cultivated  poorer  ones;  that  as  society  acquires 
numbers,  wealth,  knowledge,  improved  means  and 
methods,  cultivation  advances  upon  the  more  difficult 
but  more  fertile  and  productive  low  lands  of  the  river 
bottoms.  The  normal  tendency  is  therefore  in  the 
opposite  direction,  towards  greater  production,  diminu¬ 
tion  of  rent  in  proportion  to  produce  of  land,  and 
approach,  however  slow,  toward  equality  of  condition 
between  landlord  and  laborer.  This  again,  is  in  har¬ 
mony  with  that  natural  progress  of  things  by  which 
the  capitalist  receives  a  constantly  diminishing  share 
in  the  profits  of  manufacture,  and  by  which  the  rate 
of  interest  on  money  tends  equally  to  decrease. 

The  Malthusian  teaching  concerning  population — 
that  human  creatures  multiplied  at  a  much  more  rapid 
rate  than  supplies  of  food  could  be  produced  to  subsist 
them,  and  that  hence  in  fully  settled  countries  the 
“  over-production  ”  must  emigrate  or  be  killed  off  by 
starvation,  war,  or  pestilence,  in  order  to  keep  the 
number  down  to  the  proper  limit,  has  been  modified 
somewhat  by  the  biological  science  of  later  years,  so 
as  to  show  probability  of  a  much  slower  rate  of  increase 
for  the  future  among  the  intellectual  and  wealthy 
classes.  But  the  influences  operating  toward  this  re¬ 
sult  have  no  effect  upon  the  poor  and  ignorant ;  these 
will  continue  to  increase.  John  Stuart  Mill,  with  his 
strong  sympathies  for  the  workingman  (but  stronger 
regard  for  the  rights  of  capital)  could  see  no  hope  of 
permanently  bettering  his  condition,  no  matter  what 
else  might  be  done,  without  this  “  indispensable  ”  re- 


14  THE  POLITICAL  ECONOMY 

quirement  of  a  restraint  upon  increase  of  population. 
At  the  present  time,  some  of  the  best  friends  of  the 
worker  in  England,  are  making  active  efforts,  even 
with  the  law  and  the  government  against  them,  to 
teach  the  necessity  and  the  methods  of  such  restraint. 

Now,  it  is  not  necessary  to  discuss  what  motives 
may  or  may  not  properly  be  placed  before  those  who 
are  actually  in  hopeless  bad  circumstances,  or  before 
that  larger  class  of  both  poor  and  rich  who  are  in  an 
equally  bad  state  of  physical,  mental,  or  moral  consti¬ 
tution  and  health,  to  restrain  them  from  reproducing 
misery.  Presented  thus,  without  regard  to  class  or 
social  condition,  perhaps  nothing  could  be  said  against 
restraint.  But  to  show  the  spirit  of  the  teaching,  the 
“  true  inwardness  ”  of  it  when  held  out  as  a  doctrine 
to  be  specially  urged  upon  the  working  classes,  let  us 
take  these  few  considerations : 

First,  that  nowhere  in  modern  Europe  is  there  any 
country  so  thickly  populated  but  that  there  still  remain 
large  quantities  of  uncultivated  land,  and  especially  is 
this  true  of  England,  the  home  of  the  theory. 

Second,  that  nowhere  in  modern  Europe,  not  even 
in  Ireland,  has  there  ever  been  any  such  pressure 
of  abundant  population  upon  food-supply  but  that 
money  could  have  bought  all  the  food  that  was  needed. 
Whatever  starvation  there  has  been  was  not  because 
there  was  no  food  obtainable  anywhere,  but  because 
those  who  starved  had  not  the  means  to  purchase.  It 
was  inequality  of  wealth,  not  insufficiency  of  food. 

Third,  that  however  bright,  healthy  and  beautiful 
children  a  poor  couple  maybe  capable  of  bringing  into 
the  world,  if  fortune,  whether  from  their  own  fault  or 


OF  DEMOCRACY. 


15 


not,  is  against  them  they  are  allowed  no  moral  right 
to  propagate ;  while  a  rich  couple  (or  the  rich  un¬ 
coupled)  however  diseased,  deformed,  vicious,  insane, 
or  idiotic  their  children  may  be,  are  allowed  the  moral 
right  to  curse  the  world  with  any  number  of  them, 
simply  because  the  parents  are  able  to  support  them, 
though  education,  in  any  sense,  may  be  an  impossibility. 

To  this  doctrine,  which  insults  every  drop  of  blood 
and  every  spark  of  manliness  in  the  workingman’s 
nature — insults  him  to  the  very  core — Mr.  Carey 
opposed  not  only  the  biological  truth  that  increasing 
development  of  brain  and  nerve,  and  improvement  in 
the  quality  of  the  human  being,  would  lessen  his  pro¬ 
lificness  in  numbers ;  but  further,  that  in  the  natural 
progress  of  society,  protected  as  far  as  may  be  from 
the  spoliations  of  foreign  trade  (and  the  three  other 
plagues  before  mentioned)  man’s  power  over  the  soil 
became  increased  by  the  application  of  science,  like  his 
power  over  mechanism  ;  that  the  farmer’s  land  was  his 
instrument  of  production,  to  be  constantly  made  more 
productive  by  scientific  agriculture,  and  by  improving 
the  quality  of  the  products;  that  this,  with  the  in¬ 
creasing  ability  to  conquer  and  cultivate  the  richer 
soils  of  the  low  lands,  as  well  as  to  make  the  poorer 
ones  more  fertile  ;  together  with  the  possibility  of  pro¬ 
ducing  an  unknown  but  immense  amount  of  food  by 
fish-culture ;  were  sufficient  indications  that  Nature 
had  made  provision  for  as  many  future  inhabitants  of 
the  land  as  were  ever  likely  to  stand  upon  it.  Such 
views  allow  the  poor  man  of  the  coming  generations  an 
equal  right  to  live  with  the  rich  one  ;  and,  in  connection 
with  others  here  presented,  tend  to  give  him  something 
like  equality  in  the  means  of  making  good  his  claim. 


i6 


THE  POLITICAL  ECONOMY 


To  the  theorizing  of  the  Free  Trade  economists 
that  international  trade  regulated  itself  if  let  alone,  and 
that  one  country  could  not  rob  another,  Mr.  Carey  re¬ 
plied  by  showing  from  history,  statistics,  and  present 
facts  that  one  nation,  having  industrial  development, 
could  rob  another,  which  had  not,  by  trade  as  truly 
and  effectively  as  by  war ;  that  England  got  the  best 
of  all  those  countries  that  traded  with  her  on  Free 
Trade  terms  as  really  as  a  sharper  swindles  a  green¬ 
horn,  or  the  frontier  trader  of  the  West  the  Indians 
whose  “  raw  materials  ”  he  buys.  Only  in  degree  is 
there  difference.  It  is  this  trade  policy  that  has  made 
England  the  richest  country,  relatively,  on  the  globe, 
and  her  lowest  classes  the  most  degraded ;  for  it  tends 
in  every  way  toward  inequality,  both  at  home  and  in 
the  countries  that  submit  to  it,  enriching  the  trader 
and  transporter  by  impoverishing  the  producer ; 
whereas,  the  opposite  policy  favors  the  increase  of 
domestic  exchange,  by  increasing  the  amount  of  pro¬ 
duction  and  distributing  it  more  equally. 

That  the  teachings  of  British  Economy  in  regard  to 
land  do  not  encourage  the  distribution  of  it,  is  made 
sufficiently  clear  by  the  state  of  things  in  Britain  it¬ 
self,  where,  for  the  last  hundred  years,  it  has  been 
passing  from  the  hands  of  the  small  proprietors  into 
those  of  the  aristocracy  and  the  retired  merchants, 
and  where  there  is  now  a  smaller  proportion  of  it  held 
by  mechanics  and  by  the  workers  upon  it  than  in 
any  other  part  of  the  world.  Indeed,  so  much  is  this 
in  harmony  with  the  spirit  of  Free  Trade  Economy 
that  John  Stuart  Mill,  its  most  humane  and  liberal 


OF  DEMOCRACY. 


1 7 


representative,  could  suggest  no  better  remedy  for  the 
inequality  than  that  the  unclaimed  barren  commons 
still  existing  should  be  divided  up  into  small  patches, 
and  ownership  secured  to  those  who  would  settle  upon, 
fertilize,  and  cultivate  them  till  they  became  of  suffi¬ 
cient  value  to  need  a  sure  title. 

On  the  other  side,  Mr.  Carey,  besides  showing  that 
in  a  natural,  healthy  society  the  tendency  is  always 
toward  division  and  distribution  of  land,  has  always 
claimed  that  the  policy  of  Protection  increased  that 
tendency,  helping  to  make  land  easy  of  acquirement 
to  all  who  needed  to  work  upon  it  or  make  a  home. 
That  he  and  his  disciples  have  favored  and  advocated 
the  action  of  our  own  government  in  making  the  pub¬ 
lic  lands  free  to  settlers  there  can  be  no  doubt. 

Hard  money ,  and  a  limited  circulation  of  paper 
based  upon  it,  is  the  natural  policy  of  those  who  deal 
in  money.  Every  few  years  the  wealth  of  England 
overflows  in  loans  to  other  countries,  because  so  little 
of  it  is  distributed  (except  in  charity)  among  her  own 
poorer  classes.  Those  who  own  this  capital  are  inter¬ 
ested  in  hard  money,  for  it  secures  them  the  full  value 
of  their  property,  and,  it  may  be  contended,  more  than 
the  full  value,  while  they  have  no  interest  in  a  paper 
money,  containing,  as  paper  money  always  does,  more 
or  less  of  the  element  of  credit.  The  large  traders,  who 
get  their  credits  by  bank  discounts,  and  whose  circu¬ 
lating  medium  consists  of  checks,  drafts,  and  bills  of  ex¬ 
change,  cannot  be  expected  to  appreciate  fully  the  value 
of  that  small-money  circulation  which  to  the  farmer, 
mechanic,  and  small  merchant  is  so  essentially  neces- 


i8 


THE  POLITICAL  ECONOMY 


sary  for  business  and  labor.  Hence  the  connection  be¬ 
tween  the  state  of  affairs  and  the  policy.  It  leads 
toward  inequality  by  preventing  or  limiting  that 
natural  increase  of  the  circulating  medium  with  in¬ 
crease  of  population  and  production  which  gives  to 
Labor  its  natural  opportunity  for  increase  of  wages. 

With  different  motives  and  views,  Mr.  Carey  and 
his  school  have  represented  in  all  earnestness  that 
a  full,  free,  and  rapid  circulation  of  money  was  of  the 
greatest  importance  to  the  growth  and  prosperity  of 
society.  They  have  advocated  a  policy  that  would 
prevent  the  rich  and  spendthrift  classes  from  sending 
away  our  gold  and  silver  for  foreign  luxuries,  and  in¬ 
stead  by  retaining  it  in  the  country  furnish  a  safe  basis 
for  a  paper  currency.  Mr.  Carey  was  himself  the  first 
to  protest  against  that  wholesale  contraction  of  the 
Greenback  currency  which  followed  the  close  of  the 
Rebellion,  and  he,  if  not  the  first,  was  one  of  the  first, 
since  the  recent  agitation  of  the  subject  began,  to  pro¬ 
pose  a  National  credit  money  wholly  independent  of 
gold  and  silver,  and  banks.  He  has  also  taken  special 
pains  to  show  that  the  expansion  and  contraction  of 
a  false  credit  by  the  banks — a  credit  resting  wholly 
upon  the  credit  of  their  depositors,  not  their  own — 
that  this,  and  not  any  normal  or  ordinary  increase  of 
the  currency,  has  been  the  principal  cause  or  favoring 
condition  of  those  business  revulsions  which  have  oc¬ 
curred  periodically  ever  since  the  advent  of  moderm 
methods  in  banking. 

That  easy  money  brings  with  it  fuller  employment 
and  better  pay  to  the  workingman,  favoring  the  im¬ 
provement  of  his  condition  and  elevation  of  his  char¬ 
acter,  is  almost  too  plain  to  need  saying. 


OF  DEMOCRACY. 


19 


Looking  again  at  the  connection  between  social 
conditions  and  ideas  adapted  to  them,  we  may  see  that 
England,  having  gained  an  industrial  development  and 
power  superior  to  that  of  other  countries,  naturally  be¬ 
comes  the  great  middleman  of  the  world,  aspiring  to 
buy  raw  materials  and  supplies  from  other  countries, 
work  them  up  into  manufactured  articles,  and  sell  these 
again,  mainly  to  other  countries,  doing  the  transpor¬ 
tation  both  ways,  and  furnishing  the  money  to  carry 
on  the  business.  Those  who  supply  the  raw  materiais 
pay  her  two  profits  on  transportation,  a  third  to 
the  importer,  another  to  the  manufacturer,  still 
another  to  the  exporter  of  manufactured  goods,  and 
one,  two,  or  three  more  to  the  banker  who  furnishes 
the  funds  ;  while  themselves  losing  their  resources,  im¬ 
poverishing  their  soil,  limiting  their  industry,  and  de¬ 
grading  labor,  all  in  greater  or  less  degree.  The 
Political  Economy  that  has  grown  up  along  with  this 
policy  and  in  harmony  with  it,  representing  the  selfish 
interests  of  the  wealthiest  classes,  spreads  into  other 
countries  as  they  grow  in  wealth  and  trade,  and  manu¬ 
facture  passes  into  the  control  of  capital.  In  this 
country  its  principal  centres  of  influence  are  the  cities 
of  New  York  and  Chicago — one  the  great  centre  of  im¬ 
porting  trade,  the  other  the  largest  grain-shipping  centre 
of  the  West.  Here,  as  in  Europe,  the  Economy  goes 
along  with  the  material  interests  of  the  classes  indi¬ 
cated.  Indeed,  it  is  no  more  natural  that  a  man  brought 
up  in  a  distillery  should  believe  in  Free  Liquor  than 
that  one  educated  in  London  or  New  York  should  be¬ 
lieve  in  Free  Trade  and  Hard  Money.  To  expect 
otherwise  would  be  like  expecting  grapes  from  thorns 
or  figs  from  thistles. 


20 


THE  POLITICAL  ECONOMY 


The  later  literature  of  England,  even  aside  from 
that  pertaining  to  Economy,  is  tinctured  more  or  less 
with  the  poison  of  this  Trade  philosophy.  Her  best 
men,  like  Mill  and  Spencer,  are  fettered  in  their  thought 
and  hardened  in  their  feelings  by  a  disgusting  rever¬ 
ence  for  the  assumed  rights  of  Trade,  Wealth,  and 
Aristocracy.  Our  own  country  absorbs  so  largely  of 
English  literature  of  all  kinds  that  our  educated  classes 
imbibe  the  same  English  teaching  and  English  spirit. 
As  the  result  of  this  education,  our  literary  “culture” 
sneers  pretentiously  at  American  Economy,  although 
shortsightedness  and  sophistry  can  be  shown  to  char¬ 
acterize  all  the  leading  Free  Trade  notions.  New 
York,  our  literary  as  well  as  trade  centre,  is  in  charac¬ 
ter  and  sentiment  more  like  an  old-country  town  than 
an  American.  Wealth  is  there  the  great  god  that 
commands  more  homage  than  any  other.  The  late 
utterances  coming  from  its  press,  about  the  power  of 
the  banking  influence,  the  advisability  of  adopting  the 
English  method  of  capital-farming,  and  the  necessity 
that  Labor  should  be  contented  with  more  humble 
means  of  living,  etc.,  are  all  in  this  view  intensely  sig¬ 
nificant.  The  doctrine  and  policy  that  compels  the 
degradation  of  the  mechanic,  farmer,  and  laborer,  breeds 
the  harsh  and  arrogant  spirit  which  would  press  them 
down  to  still  lower  grades.  In  short,  there  is  no  need 
of  hesitation  in  describing  the  Orthodox  English  Po¬ 
litical  Economy  as  the  creed  of  selfishness,  caste,  arro¬ 
gance,  robbery,  and  brutality. 

Can  it  be  doubted  that  a  system  whose  ideas  teach 
the  opposite  of  all  this  is  the  doctrine  that  tends  to¬ 
ward  the  elevation  of  the  working  masses,  and  toward 
greater  equality  in  the  condition  of  all  ? 


OF  DEMOCRACY \ 


21 


Let  us  note  a  few  more  of  the  contrasting  charac¬ 
teristics  of  the  two  systems. 

British  Economy  and  policy  encourage  foreign 
trade,  which  is  always  accompanied  by  the  greatest 
amount  and  distance  of  transportation.  American 
Economy  looks  towards  the  relative  decrease  of  foreign 
commerce,  and  increase,  both  in  amount  and  propor¬ 
tion,  of  the  domestic,  in  which  the  small  merchant 
finds  most  opportunity  and  real  demand  for  his  ser¬ 
vices.  But  further,  it  looks  towards  decrease  in  the 
whole  number  of  middlemen,  for  it  contemplates  the 
location  of  producer  and  consumer  in  as  near  prox¬ 
imity  as  may  be  to  each  other,  where  their  exchanges 
can  be  made  with  the  least  necessity  for  merchant  or 
transporter.  The  middleman’s  tax  is  large  in  propor¬ 
tion  as  the  distance  of  transportation  is  great.  To  re¬ 
duce  this  expense  is  to  divide  the  amount  saved  between 
producer  and  consumer,  adding  to  the  pay  of  one  and 
diminishing  cost  to  the  other,  making  a  more  equal 
distribution. 

The  Free  Trade  teaching  entirely  ignores  the  waste 
of  natural  resources.  It  justifies  and  encourages  the 
destruction  of  forests,  impoverishment  of  soils,  and 
exhaustion  of  mines  in  one  country  to  furnish  raw 
materials  at  half  their  value  to  be  worked  up  in  an¬ 
other.  And  the  only  excuse  for  such  waste  is  that 
Nature  has  provided  these  materials  so  generously  that 
the  woodsman,  farmer  and  miner  by  thus  robbing  the 
earth  of  its  timber,  its  fertility  of  soil,  and  its  minerals 
can  buy  the  manufactured  goods  more  cheaply  than 
they  can  make  them  themselves.  Now,  these  resources 
belong  by  natural  right  to  the  whole  people.  They 


22 


THE  POLITICAL  ECONOMY 


belong  to  the  generations  of  the  future  as  well  as  to 
that  of  the  present.  The  workers  of  the  future  will 
need  timber,  they  will  need  farms  that  are  not  barren, 
they  will  need  gold,  silver  and  other  minerals.  To  rob 
the  earth  of  these  now  to  buy  foreign  goods  with  them, 
thus  giving  half  their  value  into  the  hands  of  those 
who  are  already  too  rich,  is  at  the  same  time  to  rob 
the  workingman’s  children,  and  his  children’s  children. 
Would  it  not  be  better  to  encourage  a  manufacture  in 
the  vicinity  of  those  resources  where  one-half  of  them 
would  buy  the  same  quantity  of  goods,  and  the  other 
half  could  be  saved  for  the  future.  At  least  that  seems 
to  me  to  be  taught  by  American  Economy. 

Every  man  by  being  born  into  the  world  has  a  natu¬ 
ral  right  to  a  share  in  these  natural  resources.  Some¬ 
where  and  in  some  way,  on  the  land  or  otherwise,  he 
has  a  right  to  invest  his  labor  so  that  he  can  live  by 
it.  His  right  to  labor  and  his  right  to  live  are  virtu¬ 
ally  one.  If  he  is  poor  the  opportunity  to  labor  is  to 
him  the  most  important  thing  of  all.  Yet  this  matter 
is  almost  totally  disregarded  by  the  writers  of  the 
British  school.  The  only  right  of  the  laborer  they 
appear  to  recognize  is  his  right  to  buy  where  he  can 
buy  cheapest,  and  sell  where  he  can  sell  dearest, 
whether  he  has  anything  to  buy  with  or  riot — whether 
or  not  he  has  any  chance  to  sell  his  labor. 

Mr.  Carey  and  his  school  have  always  made  the 
opportunity  to  labor  a  point  of  the  first  importance. 
They  have  urged  their  policy  on  the  ground  that  it 
created  a  demand  for  labor,  and  for  labor  of  various 
kinds,  the  tendency  being  toward  constant  employ¬ 
ment,  rise  of  wages,  and  improvement  of  condition. 


OF  DEMOCRACY. 


23 


The  orthodox  English  Free  Trade  system  of  Politi¬ 
cal  Economy  has,  for  its  one  grand  object,  the  quickest 
production  and  greatest  accumulation  of  Wealth ,  re¬ 
gardless  of  its  distribution  or  of  the  ultimate  conse¬ 
quences  to  those  who  produce  it.  The  selfish  instincts 
only  are  appealed  to,  with  such  results  as  might  be 
expected  from  unrestrained  selfishness — the  greatest 
extremes  of  riches  and  poverty,  luxury  and  degrada¬ 
tion,  discord,  misery,  and  prospective  anarchy.  The 
system  of  Mr.  Carey  has,  for  its  first  and  greatest 
object,  the  welfare  of  Man,  and  the  distribution  of 
wealth  in  a  way  to  benefit  and  '  elevate  the  masses  ;  to 
give  comfort,  self-respect,  and  development  to  those 
who  need  it  most.  From  first  to  last,  this  purpose 
runs  through  everything.  The  unselfish  motive  here 
generates  ideas  whose  natural  effect  is  to  promote 
justice,  equality,  harmony,  and  the  permanent  pros¬ 
perity  of  all  the  various  parts  of  society. 

[It  must  not  be  supposed,  from  the  general  tenor 
of  my  statement,  that  there  is  any  one-sidedness  in  the 
views  of  American  Economists — that  capital  is  under¬ 
valued,  or  that  the  merchant,  transporter,  and  banker 
are  not  considered  equally  useful  with  any  others,  so 
far  as  their  work  is  necessary.  It  is,  rather,  a  more 
just  and  liberal  all-sidedness  that  animates  them  in 
their  disposition  to  uphold  and  strengthen  the  weaker 
parts  of  the  social  structure  in  a  fairer  balance  against 
those  that  are  naturally  strong  and  liable  to  overbear.] 

Gathering  up  now  the  principal  aspects  of  the  two 
opposing  systems,  to  take  a  more  concentrated  view 


24 


THE  POLITICAL  ECONOMY 


of  them,  let  me  repeat  that  one,  the  English,  is  rela¬ 
tively  metaphysical,  narrow,  theoretical,  and  doctrin¬ 
aire — the  other  broad,  historic,  inductive,  scientific, 
practical.  One  advocates  freedom  for  the  rich  and 
powerful  class — the  other  protection  for  the  poorer 
and  weaker  classes.  One  glorifies  trade  and  favors 
the  middleman  at  the  expense  of  all  others — the  other 
stands  by  the  producer  and  producing  consumer.  One 
represents  the  policy  of  Capital,  which  results  in  dis¬ 
cord — the  other  that  of  self-respecting  Labor,  which 
makes  for  harmony.  One  is  the  Economy  of  waste¬ 
fulness,  and  robbery  of  the  soil — the  other  saves  re¬ 
sources,  and  utilizes  labor.  One  is  short-sighted, 
looking  only  to  present  money-making — the  other  is 
sagacious,  contemplating  the  needs  and  welfare  of  both 
Present  and  Future.  One  tends  to  the  cheapening  of 
raw-materials,  labor,  and  humanity — the  other  towards 
raising  the  value  of  all  three.  One  has  in  it  the  spirit 
of  selfishness — the  other  that  of  unselfishness.  One 
is  Malthusian — the  other  human.  One  has  for  its  only 
object  Wealth — the  other  for  its  first  great  object 
Man. 

British  Economy  ends  in  the  dismal — American  in 
unlimited  progress,  success  and  hope.  One  holds  out 
the  policy  that  goes  with  centralization  of  wealth  and 
power,  with  aristocracy,  corruption,  practical  slavery, 
and  decay — the  course  and  end  of  all  the  old  nations 
of  the  past — the  other,  that  of  democracy,  of  freedom, 
of  moral  progress,  of  equality  in  property,  education, 
development,  influence,  position — universal  equality 
and  national  immortality. 

However  slight  may  be  the  effect  of  any  one  of  the 


OF  DEMOCRACY. 


25 


ideas  here  referred  to,  however  strong  or  feeble  the 
influence  from  the  whole  of  either  system  taken  to¬ 
gether,  the  fact  remains  that  the  resulting  tendency  is 
all  in  one  direction.  Let  us  then  reflect  that  central¬ 
ization  of  wealth,  and  European  inequality  is  actually 
growing  upon  us  in  all  the  older  and  richer  portions 
of  our  country ;  that  equality  before  the  law  is  almost 
useless  without  something  like  equality  in  property, 
for  the  rich  man  can  beat  the  poor  and  cheat  him  of 
justice  in  nearly  every  case  where  they  come  together 
before  the  courts  ;  that  inequality  in  education  leaves 
the  ignorant  to  become  the  dupes  of  the  demagogue, 
and  makes  equal  suffrage  little  better  than  a  delusion, 
depriving  the  wisest  men  of  all  proper  share  of  guiding 
influence ;  that  social  inequality  is  the  sole  cause  of 
that  universal  extravagance,  display,  and  snobbishness, 
which,  whether  in  themselves  or  the  rich,  is  in  either 
case  a  curse  to  the  poor ;  that  inequality  of  moral 
development,  besides  keeping  our  honestest  men  out  of 
public  affairs  at  one  extreme,  at  the  other  adds  the 
great  burden  of  crime  to  all  else  from  which  we  suffer. 
And  when  we  consider,  also,  that  sufficient  property 
to  allow  of  comfort  and  partial  leisure  is  almost  indis¬ 
pensable  to  the  attainment  of  intellectual,  moral,  or 
social  equality,  the  importance  of  a  set  of  ideas  that 
can  properly  be  called  the  Political  Economy  of  Democ¬ 
racy  or  Equality,  can  hardly  be  over-estimated. 

I  do  not  assume  to  represent  these  teachings  pre¬ 
cisely  as  Mr.  Carey  and  others  have  stated  them,  or  as 
any  one  beside  myself  would  state  them.  Neither,  as 
before  said,  do  I  propose  to  offer  any  of  the  evidence 


26 


THE  POLITICAL  ECONOMY 


on  which  they  rest.  That  evidence  is  to  be  found  in 
the  works  of  Mr.  Carey  and  various  writers  upon 
National  Economy.  My  object  is,  instead,  to  induce 
others  to  examine  these  proofs,  and  ascertain  for  them¬ 
selves  if  the  doctrines  are  true,  and  if  they  have  any 
such  bearing  as  is  here  represented.  A  certain  portion 
of  our  people  should  be  especially  interested  in  doing 
this. 

A  new  political  party  has  sprung  up  in  this  country, 
in  a  considerable  degree  owing  its  birth  and  its  inspira¬ 
tion  to  men  of  the  American  school.  It  assumes  to 
represent  Labor  and  to  be  devoted  to  the  welfare  of 
the  producing  classes.  If  there  is  any  such  opposite¬ 
ness  of  character  in  the  two  leading  systems  of  Politi¬ 
cal  or  National  Economy  as  I  have  asserted,  the  men 
of  this  party  should  make  themselves  sure  of  it  as 
soon  as  possible.  Furthermore,  this  party  is,  for  other 
reasons,  directly  interested  in  Political  Economy  as  no 
former  party  has  ever  been.  Its  very  life  and  success 
depends  upon  it  having  this  kind  of  knowledge.  Only 
by  having  it  can  its  leaders  know  what  are  the  true  inter¬ 
ests  of  Labor,  and  how  the  masses  are  cheated,  in  a 
hundred  ways,  out  of  their  rights,  opportunities,  and 
advantages.  Only  by  having  it  can  the  people  tell 
whether  they  are  led  by  honest  and  capable  men,  or 
swindled  by  politicians  as  heretofore.  Only  by  the 
help  of  this  knowledge  can  the  party  inaugurate  a  new 
monetary  policy  or  policy  of  any  kind,  in  place  of  that 
to  which  they  are  opposed,  that  will  be  permanently 
successful.  Only  by  having  it  can  they  avoid  the  mis¬ 
takes  natural  to  a  new  party  composed  so  largely  of 
men  just  beginning  to  think  and  to  learn  upon  Eco¬ 
nomic  subjects. 


OF  DEMOCRACY. 


27 


Besides  the  men  of  this  party,  all  men  of  other  par¬ 
ties,  who  have  not  a  selfish  interest  in  the  teaching  and 
policy  of  a  selfish  system,  should  have  both  a  selfish 
and  unselfish  interest  in  understanding  this  science 
sufficiently  to  judge  if  there  are  in  it  any  such  opposite 
drifts  as  have  been  described. 


The  American  school,  however,  has  not  yet  fur¬ 
nished  the  whole  of  the  Political  Economy  of  Democ¬ 
racy.  Mr.  Carey  laid  a  noble  foundation,  and  raised  a 
large  part  of  the  superstructure.  The  growth  of  his 
influence,  though  slow,  is  none  the  less  likely  to  be 
sure  and  lasting ;  and  his  work  will  not  in  the  present 
age  and  country  long  wait  for  helpers.  Some  small 
additions  to  it  have  already  been  made,  and  some 
things  of  importance  are  likely  to  be  developed  in  the 
future.  In  taking  a  hasty  glance  at  these  last,  how¬ 
ever,  it  is  necessary  to  begin  with  a  few  words  upon 
the  Function  of  Government  as  viewed  from  the  stand¬ 
points  of  the  opposing  denominations. 

[It  may  be  well  also  to  state  that  I  am  not  now,  or 
any  farther,  even  attempting  to  represent  views  for 
which  any  one  but  myself  can  be  held  responsible.] 

According  to  the  general  teaching  of  the  English 
economists,  Government  has  no  function  in  regard  to 
industrial  and  mercantile  affairs  except  the  enforcement 
of  contracts,  and  protection  of  the  right  of  unlimited 
free  competition,  however  fierce  and  destructive.  Man's 
right  to  buy  and  sell  is  his  most  precious  right,  and 
must  be  preserved  whoever  may  suffer.  It  is  assumed 


28 


THE  POLITICAL  ECONOMY 


that  the  best  man  will  win  in  the  struggle  for  exist¬ 
ence  (that  is,  wealth)  and  thus  the  survival  of  the  fittest, 
in  agreement  with  the  law  of  Natural  Selection, 
will  be  secured.  The  practical  result  of  the  laisser 
faire  policy  is  that  not  only  the  weak  and  inferior  in 
brains,  character,  and  energy,  but  also  those  who  are 
weak  in  inherited  capital,  rich  friends,  and  opportuni¬ 
ties  are  crushed  out  and  kept  down,  while  the  few 
strongest,  with  the  largest  capitals,  maintain  their  posi¬ 
tion  and  thrive.  The  process  may  be  seen  going  on 
in  any  of  our  cities  or  large  towns,  and  is  sometimes 
described  as  “  the  big  fish  eating  up  the  little  ones.” 
Ultimately,  in  a  fully  settled  country  it  comes  to  this — 
that  only  the  few  who  have  large  capitals  can  do  any 
business  of  any  kind,  all  others  becoming  hirelings 
upon  the  employer’s  terms,  and  practically  slaves — a 
true  “  Commercial  Feudalism.” 

The  economists  of  the  American  school  assume 
that  Government  has  a  function  in  providing  for  the 
common  welfare  as  well  as  protecting  the  right  of  the 
individual,  which  extends  to  industrial  and  commercial 
matters  as  well  as  to  all  others.*  Any  action  of  the 
individual’s  freedom  that  is  injurious  to  the  collective 
well-being  is  subject  to  correction,  even  though  tech- 


*  That  class  of  people  who  believe  by  instinct  in  everything  called 
“  free,”  and  who  are  anxious  for  the  removal  of  all  governmental  re¬ 
straint,  should  particularly  take  notice  that  in  commerce  and  industry 
the  great  capitalists,  the  speculators,  swindlers,  monopolists,  etc.,  really 
make  war  upon  society  by  abuse  of  free  competition,  robbing  not  only 
its  poor  and  simple,  but  its  more  honest,  truthful,  and  worthy  members 
in  a  way  that  ordinary  law  does  not  reach,  and  which  requires  the  in¬ 
tervention  of  the  central  power  as  truly  as  does  war  from  an  outside 
enemy. 


OF  DEMOCRACY. 


29 


nically  no  right  of  another  has  been  violated.  The 
right  of  the  individual  to  buy  and  sell  is  subordinate 
to  the  good  of  the  community,  and  may  be  interfered 
with  and  modified  as  far  as  the  public  good  requires. 
According  to  the  logic  of  this  position,  there  should 
be  nothing  to  prevent  the  government  from  building  a 
competing  railroad  to  counteract  a  monopoly,  from 
taxing  a  business  out  of  or  into  existence,  from  loan¬ 
ing  its  money  or  credit  in  a  time  of  depression,  or  from 
engaging  in  any  kind  of  industry  if  the  public  demand 
it  in  order  to  be  protected  from  imposition.  The  power, 
influence,  and  credit  of  the  people  as  a  whole — the 
nation — is  to  be  used  for  the  benefit  of  the  people. 
Comparing  large  things  to  small,  the  position  of  the 
government  is  essentially  the  same  as  that  taken  by 
the  head  of  a  numerous  family,  some  of  whose  mem¬ 
bers  are  not  yet  able  to  take  care  of  themselves,  and 
others  not  sufficiently  conscientious  to  regard  the 
rights  and  interests  of  the  whole. 

Developing  this  idea  of  governmental  function  to 
its  farthest  extreme,  it  might  be  held  that,  when  de¬ 
manded  by  the  public  welfare  and  the  popular  will,  the 
government  might  properly  take  upon  itself  the  owner¬ 
ship  and  control  of  all  property  used  in  production 
and  distribution,  and,  superseding  private  enterprise, 
manage  all  industrial  affairs  entirely  for  the  common 
benefit  of  the  whole  people — a  programme  similar  to 
that  of  the  Socialistic  Labor  party  or  Social  Demo¬ 
crats. 

Now,  we  cannot  expect  to  escape  the  law  of  Sur¬ 
vival  of  the  Fittest.  The  superior  will  live  and  thrive 
at  the  expense  of  the  inferior,  in  trade  and  industry 


30 


THE  POLITICAL  ECONOMY 


as  truly  as  in  the  conflicts  of  savages,  or  in  the  chase 
of  wild  beasts  for  their  prey.  The  inferior  will  suffer, 
and  be  compelled  to  take  the  lower  position.  But  the 
superiority  should  be  a  superiority  of  intelligence  and 
character,  not  one  of  wealth  and  good  fortune  merely. 
The  masses  of  the  people,  if  they  are  not  too  inferior 
in  intelligence  and  energy,  will  use  the  power  they  now 
possess  to  prevent  their  natural  opportunities  from 
being  taken  away  by  those  who  already  have  more 
wealth  than  they  can  use,  or  who  by  inherited  capital, 
powerful  friends,  superior  education,  or  good  fortune 
of  any  kind,  have  an  advantage  not  due  to  their  per¬ 
sonal  merits.  These  should  not  be  allowed  to  get 
entirely  ahead  of  others,  who,  by  natural  character  and 
ability,  are  their  equals,  and  entitled  to  an  equal  oppor¬ 
tunity.  The  factitious  advantages  given  by  wealth  are 
not  to  defeat  natural  justice,  which  would  allow  to  all 
an  equal  start  in  the  same  race.  In  short,  the  people 
will  show  that  they  are  not  inferior,  by  combining  their 
strength  and  refusing  to  be  preyed  upon  like  little  fish 
by  big  ones. 

If,  on  the  other  hand,  the  free-competition  process 
be  allowed  to  go  on  to  its  extreme  result  of  dividing 
society  into  two  principal  classes,  the  few  rich  and 
many  poor — the  capitalists  and  proletaries — then  the 
ideas  belonging  to  an  opposite  motive  and  tendency 
will  be  carried  to  their  extreme  development,  the  doc¬ 
trines  of  Social  Democracy  will  spring  up  and  grow, 
(as  they  are  already  beginning  to  do,  in  this  country 
as  well  as  in  Europe),  and  the  proposal  to  put  all  capital 
and  all  industry  into  the  hands  of  the  government, 
with  a  distribution  of  the  products  for  the  common 


OF  DEMOCRACY. 


3i 


good,  will  be  advocated  and  urged  in  an  earnestness 
proportionate  to  the  force  with  which  competition 
presses  the  workingman  down  to  a  lower  grade.  In 
the  meantime,  various  forms  of  Cooperation  and  In¬ 
dustrial  Partnership  will  be  resorted  to  as  compromise 
efforts  to  avoid  the  worst  evils  of  competition  without 
resisting  it  openly. 

If  the  American  people  think  Social  Democracy  too 
radical  a  remedy  for  the  evils  likely  to  arise  in  time 
from  unchecked  free  competition,  they  will,  as  above 
predicted,  prevent  those  evils  by  whatever  means  may 
be  most  efficient. 

As  one  step  in  a  course  of  opposition  to  the  old 
methods  of  reckless  free  competition,  it  may  be  antici¬ 
pated  that  the  policy  of  the  government  in  partially 
limiting  the  ownership  of  land,  by  selling  (or  giving) 
it  in  small  quantities  to  those  only  who  settle  upon  it, 
will  sometime  be  extended  to  the  whole  country,  and 
one  man’s  possessions  be  limited  by  law  to  an  amount 
thought  suitable  for  farming  purposes.  Not,  of  course, 
in  the  near  future,  but  whenever  a  sufficiently  numer¬ 
ous  population  shall  make  it  advisable.*  The  distribu¬ 
tion  of  land  is  the  distribution  of  a  pretty  sure  means 
of  comfort  and  independence  to  the  many ;  and  they 
will  not  be  wise  if  they  allow  this  land,  which  is  the 
natural  heritage  of  all,  to  pass  into  the  hands  of  the 
few,  or  to  remain  there  if  by  any  means  a  part  of  it 
should  get  into  such  possession.  Not  another  acre 
should  ever  be  given  to  help  build  premature  railroads, 

*  A  plan  for  accomplishing  this  can  be  suggested  which  apparently 
would  involve  but  little  difficulty. 


32 


THE  POLITICAL  ECONOMY 


and  all  thus  offered  to  which  a  fair  title  has  not  been 
earned  by  the  railroads,  should  be  immediately  re¬ 
claimed.  It  is  even  now  time  to  consider  whether  the 
present  selling  of  government  land  in  large  quantities 
to  capitalists  and  speculators,  and  indeed  whether  the 
sale  of  it  in  any  way,  should  not  be  stopped  at  once, 
and  the  acquisition  of  such  land  be  made  possible  only 
in  small  amounts,  by  living  upon  it  according  to  the 
terms  by  which  it  is  offered  free  to  settlers. 

A  second  step  may  consist  in  a  modification  of  the 
present  Protective  policy.  It  is  often  sought  to  be 
modified  in  the  interest  of  the  trader  and  of  some 
strong  manufacture ;  let  us  consider  what  is  possible 
in  the  opposite  direction.  Protection  pure  and  simple 
— Protection  for  the  sake  of  Labor  and  the  producing 
interests — has  never  yet  had  a  fair  trial.  It  has  always 
been  mixed  up  by  politicians  and  statesmen  with  taxa¬ 
tion — with  a  tariff  of  duties  for  revenue — and  Protec¬ 
tion  has  always  suffered  from  the  association.  The 
only  valid  argument  against  the  policy,  aside  from  that 
against  its  consistency,  before  adverted  to,  is  the  one 
that  it  does  not  protect — that  it  defeats  itself — that  by 
putting  duties  upon  everything,  everything  is  raised  in 
price,  and  the  cost  of  raw  materials,  of  living,  and  of 
labor,  is  so  much  increased  that  the  additional  cost  of 
manufacturing  an  article  is  equal,  or  nearly  so,  to  the 
duty  on  the  imported  article ;  the  manufacturer’s  profit 
is  therefore  no  greater  than  before;  it  is  just  as  diffi¬ 
cult  for  him  to  compete  with  his  foreign  foe,  and  nothing 
is  gained.  This  is  in  greater  or  less  degree  true ;  but 
the  validity  of  the  reasoning  is  not  against  Protection 


OF  DEMOCRACY. 


33 


itself ;  it  is  against  Protection  and  Taxation  combined 
— against  tariff  for  protection  and  revenue  both — 
against  duties  on  everything. 

Now  duties  have  no  business  to  be  upon  every¬ 
thing.  Duties  laid  for  protection  of  industry  should  be 
laid  only  upon  commodities  that  compete  with  our 
own  production.  Everything  else  should  be  totally 
free  of  duty.  Every  duty  laid  for  revenue,  in  the  usual 
way,  nullifies  to  some  extent  the  effect  of  those  laid  for 
protection.  And  when  these  revenue  duties  are  put 
upon  everything,  they  may  in  some  cases  neutralize 
the  effect  of  the  protective  duties  entirely.  The  manu¬ 
facturer  and  laborer  are  then  both  cheated ;  they  ask 
for  bread,  and  get  a  stone — with  perhaps  a  little  crust 
on  it.  Duties  for  revenue  are  a  double  swindle  upon 
the  laborer ;  they  not  only  cheat  him  of  the  protection 
he  needs,  but  compel  him  to  pay  a  larger  part  of  the 
tax  thus  raised  than  he  does  of  any  other. 

Systematic  and  consistent  protection  must  extend 
to  every  kind  of  raw  materials  that  can  be  produced 
at  home,  and  every  manufacture  likely  to  establish 
itself  after  a  fair  opportunity.  The  object  is,  by  a  vol¬ 
untary  loss  for  a  few  years,  to  establish  industries  that 
shall  be  of  benefit  to  the  nation  for  all  time ;  and  as 
many  such  as  possible.  The  complaint  of  some  manu¬ 
facture,  already  strong,  that  is  able,  or  would  be,  to 
import  certain  materials  more  cheaply,  must  not  be 
allowed  for  a  moment  to  interfere  with  this  policy. 
Neither  must  commercial  treaties  or  any  international 
arrangements.  These  things  indicate  that  some  strong 
industry  wishes  to  thrive  at  the  expense  of  a  weaker 
one.  An  industry  established  must  not  prevent  a  new 


34 


THE  POLITICAL  ECONOMY 


one  from  growing  up.  The  producer  of  raw  materials 
and  the  laborer  who  has  only  his  labor  to  invest  are 
the  ones  least  able  to  protect  themselves,  and  should 
have  protection  first,  last,  and  most.  This  is  to  protect 
industry  at  its  very  roots. 

There  is  another  kind  of  protection,  not  inconsist¬ 
ent  with  the  above,  namely,  the  protection  of  resources. 
Not  the  natural  resources  from  which  come  raw  mate¬ 
rials,  but  the  money  and  credit  of  a  people,  acquired 
by  industry.  The  spendthrift  classes,  rich  and  poor, 
and  the  mercantile  class  assist  each  other  to  bring  on 
a  period  of  extravagance,  excessive  trade,  and  specu¬ 
lation,  during  which  these  resources  are  spent  and  go 
out  of  the  country  for  imported  luxuries ;  after  which 
follows  national  bankruptcy,  and  then  a  period  of  hard 
times  while  another  store  of  resources  is  being  accu¬ 
mulated  to  be  again  spent  in  the  same  manner;  an 
experience  of  which  we  have  already  had  several  repe¬ 
titions.  This  it  is  within  the  right,  the  power,  and 
the  duty  of  the  national  government  to  prevent.  As 
the  father  of  a  family  restrains  the  dissipated  and 
spendthrift  members  of  it  from  wasting  his  and  their 
own  property,  and  thus  bringing  ruin  upon  the  whole, 
so  the  government  should  restrain  Shoddydom  from 
ruining  the  whole  nation.  To  this  end  it  should  im¬ 
pose  duties  upon  foreign  luxuries  to  any  extent  that 
may  be  necessary  to  effectively  prevent  an  unfavorable 
balance  of  trade.  Tariffs  have  sometimes  been  designed 
to  serve  this  purpose  to  some  extent  along  with  others, 
but  never  with  sufficient  thoroughness,  nor  as  an  openly 
acknowledged  duty  of  the  government.  Such  protec¬ 
tion  can  be  accomplished  without  increasing  the  cost 


OF  DEMOCRACY. 


35 

of  anything  that  ordinarily  enters  into  the  working¬ 
man’s  style  of  living. 

When  these  two  forms  of  Protection,  having  only 
these  two  objects,  fail  to  raise  incidentally  a  sufficient 
amount  of  revenue,  the  balance  can  be  provided  by  a 
graduated  tax  on  incomes.  These  are  the  only  meth¬ 
ods  yet  practiced  for  raising  a  tax  that  do  not  compel 
the  poor  man  to  pay,  directly  or  indirectly,  more  than 
his  proper  share. 

Protection  once  properly  applied,  it  should  be,  what 
it  has  never  yet  been  in  this  country,  a  fixed,  settled, 
and  permanent  arrangement  for  an  unlimited  time. 
If  the  policy  is  a  correct- one  it  is  good  for  the  masses 
of  other  countries  as  well  as  ours ;  and  this  being  so 
when  once  a  tariff  has  been  adapted  to  meet  the  wants 
of  any  country  there  is  no  reason  why  it  should  ever 
be  greatly  changed  or  the  policy  abandoned.  And 
when  we  shall  have  become  capable,  as  we  shall  be 
soon,  of  producing  manufactured  goods  equal  to  the 
best,  it  is  to  be  hoped  our  people  will  never  be  guilty 
of  urging  a  selfish  Free  Trade  policy  upon  some  other 
country  whose  industrial  capacity  may  be  less  devel¬ 
oped. 

The  monetary  policy  of  the  nation  must  depend 
upon  its  industrial  policy.  This  can  be  easily  made 
out. 

A  currency  of  uniform  and  steady  value  is  as 
necessary  to  the  honest  merchant  doing  a  legitimate 
businesss,  as  to  the  mechanic  or  farmer  who  labors  for 
his  dollar  with*  his  muscles  only.  There  is  no  one  but 
the  speculator — the  mere  trader,  who  has  only  the 


36 


THE  POLITICAL  ECONOMY 


gambler’s  justification  for  his  business, — that  can  derive 
any  advantage  from  a  varying  standard  of  value. 
Hard  money  and  soft  money  partisans  are  equally 
agreed  upon  the  necessity  of  an  unvarying  dollar. 
But  whether  it  is  of  specie  or  paper  makes  practically 
very  little  difference.  If  a  nation  is  bankrupt  its  hard 
money  very  quickly  disappears.  If  it  is  earning  more 
than  it  spends — selling  more  than  it  buys — its  paper 
money  is  as  good  as  gold,  for  it  has  or  can  have  the 
metal  with  which  to  redeem  it  if  required ;  and  a  very 
little  specie  will  in  such  a  case  secure  a  large  amount 
of  paper,  because  there  can  be  no  great  demand  for 
specie.  Let  it  be  observed,  too,  that  when  specie  is 
going  out  of  a  country  a  gold  dollar  becomes,  to  that 
coimtry ,  as  varying  and  unsteady  in  its  actual  value, 
that  is,  its  purchasing  power,  as  any  discredited  paper 
dollar,  this  value  increasing  and  prices  decreasing  as 
more  of  the  metal  is  exported.  It  is  only  the  good 
financial  condition  of  a  country — its  having  greater 
resources  than  liabilities,  and  being  able  to  have  and 
to  retain  either  kind  of  money — it  is  only  this  that 
makes  any  circulating  medium  of  practical  use  to  its 
people.  Without  it  the  hardest  money  will  disappear  ; 
with  it  the  softest  paper  will  be  good,  or  can  be  made 
good  at  any  moment. 

And  this  condition  is  to  be  secured  by  the  protection 
of  our  financial  resources ,  as  described  above.  No 
other  means  will  sustain  business  confidence,  and  keep 
in  circulation  a  currency  worth  having.  A  non-export¬ 
able  money  will  not  save  us  from  hard  times;  for,  in  a 
period  of  business  activity,  when  general  trade  is  good, 
speculation  prosperous,  the  people  extravagant,  foreign 


OF  DEMOCRACY. 


37 


trade  active  like  the  rest,  then  more  imported  goods 
will  be  bought  than  home  productions  pay  for,  and 
after  the  precious  metals  are  exported,  bonds  or  other 
evidences  of  debt,  which  also  represent  credit,  will  be 
sent  out  until  credit  is  exhausted,  after  which  they  fall  in 
price — like  a  doubtful  man's  note  sold  at  a  discount — 
speculators  and  premature  enterprises  fail,  merchants 
connected  with  them  are  obliged  to  follow,  confidence 
is  destroyed,  and  hard  times  set  in — the  experience  we 
have  been  passing  through  since  1862.  Nor  will  a 
specie  basis  currency  of  any  ordinary  strength  secure 
us  any  better ;  we  have  had  the  like  experience  with 
that  several  times,  and  the  bottom  flies  out  of  every¬ 
thing  just  as  quickly.  Neither,  in  ordinary  times , 
would  a  low  rate  of  interest  on  money  loaned  by  the 
government,  if  that  were  to  be  made  practicable,  for  it 
would  stimulate  excessive  trade  and  reckless  expendi¬ 
ture  perhaps  worse  than  anything  else.*  The  nation 
is  subject  to  the  same  laws  that  control  the  fate  of  an 
individual  or  a  family  ;  when  either  one  of  them  takes 
on  the  habits  of  a  spendthrift,  as  our  own  country  has 
done  every  time  it  had  the  means,  the  same  experience 
happens  to  it ;  first,  its  hard  money  and  other  ex- 


*In  a  time  of  commercial  revulsion,  on  the  contrary,  a  loan  of  its 
credit  by  the  government  to  the  people  would  in  all  probability  be  an 
immense  help  toward  moderating  the  reaction,  mitigating  or  avoiding 
its  worst  consequences,  and  enabling  business  sooner  to  revive.  A 
vast  amount  of  good,  apparently,  could  have  been  accomplished  by 
our  government  during  the  last  five  years  if,  instead  of  having  its 
financial  policy  determined  in  the  interest  of  the  moneyed  class,  its 
credit  (credit  money)  had  been  freely  loaned,  through  its  Post  Office 
agencies,  to  those  who  needed  it  most.  Prevention,  however,  is  far 
more  important  than  any  partial  remedy. 


38 


THE  POLITICAL  ECONOMY 


changeable  property  goes,  then  its  credit  is  taken  till 
that  becomes  suspicious,  then  follows  bankruptcy  and 
a  return  to  hard  work  and  frugality,  with  an  accom¬ 
paniment  of  vagabondage,  pauperism,  or  starvation. 

The  ready  objection  to  all  this  will  be  that  we  have 
been  having  our  resources  protected  during  the  last 
period  of  business  activity,  and  the  usual  result  has 
come  about  notwithstanding.  But  that  protection, 
though  unusually  great,  was  not  extraordinary  in  any 
such  degree  as  to  compare  with  the  extraordinary 
amount  of  paper  money  put  in  circulation,  the  extra¬ 
ordinary  extravagance  of  expenditure,  and  the  extra¬ 
ordinary  rush  of  business  and  speculative  gambling 
which  characterized  that  period.  It  could  not,  there¬ 
fore,  have  been  expected  to  counteract  it  sufficiently. 

If  these  views  are  correct,  the  policy  to  be  antici¬ 
pated  for  the  future  is  that  the  National  Government 
shall  furnish  the  circulating  medium,  assuming  that 
which  is  now  issued  by  the  banks,  when  advisable, 
putting  it  out  for  its  current  expenses,  or  in  any  legiti¬ 
mate  undertaking,  being  responsible  for  it  and  taking 
care  to  make  it  as  good  as  any  other  money,  by 
making  it  exchangeable  for  any  other,  which  it  can  do 
by  fully  protecting  its  monetary  resources  in  the  way 
indicated.  As  the  amount  of  this  currency  will  in¬ 
crease  in  proportion  to  the  country’s  increase  in 
population  and  wrealth,  while  the  use  of  gold  and 
silver  money  becomes  less  and  less  with  the  advance  of 
civilisation,  the  paper  circulation  will  in  time  come  to 
be  very  large,  and  will  perhaps  have  but  a  small  pro¬ 
portional  amount  of  specie  basis.  Still,  as  there  will 
be  but  small  demands  for  what  is  called  “  the  world’s 


OF  DEMOCRACY. 


39 


money,’ ’  and  these  only  for  use  in  the  world  outside 
the  country,  while  the  use  of  precious  metals  in  the 
arts  will  be  more  than  supplied  by  the  current  pro¬ 
duction,  the  small  amount  of  basis,  will  be  practically 
sufficient,  and  the  result  comes  to  be  a  practical  super- 
sedure  of  coin  by  paper  money. 

To  go  along  with  such  a  currency,  or  indeed  with 
any  other,  there  should  be  a  policy  that  looks  to  the 
discouragement  and  check  of  the  trading  propensity, 
by  the  abolition  of  all  laws  for  the  collection  of  mer¬ 
cantile  debts,  by  the  limitation  of  bank  loans,  by 
making  illegal  all  doubtful  speculative  transactions* 
and  in  every  way  preventing,  as  far  as  possible,  that 
easy  and  illegitimate  credit ,  which  in  easy  times  is 
obtained  by  men  whose  character  and  habits  are  un¬ 
worthy  of  it,  which  is  the  great  means  of  inducing  or 
facilitating  excessive  trade,  and  which,  in  its  final 
expansion  by  everybody  to  the  bursting  point,  is  the 
cause  of  crises,  revulsions  and  hard  times. 

The  rise  of  wages  that  should  accompany  prosper¬ 
ous  business  and  increase  of  wealth  is  to  be  expected, 
not  from  any  cause  that  produces  a  general  rise  in 
prices,  but  from  improvement  in  the  condition  of  the 
producing  classes.  The  less  speculation  or  excitement 
in  trade,  the  less  inflation  of  credit  by  the  banks-  and 
consequent  less  variation  in  general  prices — the  steadier 
the  business  movement — the  firmer  will  be  the  confi¬ 
dence  of  business  men,  the  more  constant  will  be  the 
employment  of  labor,  the  more  general  the  distribu¬ 
tion  of  wealth,  the  greater  and  more  certain  the 
improvement  of  the  worker’s  condition,  the  more 
independent  he  becomes,  and  the  better  able  to  demand 
and  obtain  a  higher  rate  of  pay  for  his  services. 


40 


THE  POLITICAL  ECONOMY 


One  other  business  besides  the  control  of  the  cur¬ 
rency  may  be  safely  put  into  the  hands  of  the  National 
Government  as  soon  as  possible ;  that  is,  the  manage¬ 
ment  of  Savings.  Not  by  any  such  half-way  method 
as  proposed  by  politicians,  but  by  a  system  so  thorough 
and  complete  that  every  poor  man  or  woman  shall 
have  the  freest  opportunity  to  deposit  any  amount, 
from  one  dollar  upward,  in  the  Post  Office  of  any  little 
village,  where  it  shall  be  absolutely  secured  by  the 
government,  and  draw  such  interest  as  its  lowest  bonds; 
while  proper  regulations  shall  limit  the  benefits  of  the 
system  to  those  for  whom  it  is  designed.  As  trading 
will  always  be  overdone  because  less  disagreeable  than 
some  other  occupations,  and  needs  to  be  discouraged, 
so  saving  should  receive  the  fullest  ^^couragement  be¬ 
cause  it  involves  thoughtfulness,  prudence,  and  self- 
denial,  virtues  which  to  some  of  the  poor  are  very  dif¬ 
ficult  to  practice.  If  the  government  has  no  present 
need  of  the  money  thus  collected,  it  can  at  least  use  it 
to  buy  its  own  bonds  in  open  market,  or  loan  it  to 
parties  who  do  need  it,  in  such  a  way  as  to  secure  itself 
against  loss.  And  as  long  as  it  can  do  this  it  should 
be  considered  under  moral  obligation  to  do  it  for  the 
sake  of  those  who  would  be  benefited  by  the  general 
facilities  for  saving. 

A  change  in  method  of  Taxation  is  possible  in  the 
future  as  still  another  step  toward  elevation  of  the 
working  classes,  and  approach  toward  equality.  The 
germ  of  Graduated  Taxation,  thus  far  exhibited  only 
in  a  graduated  tax  on  incomes,  may  develop  into  a 
graduated  tax  upon  all  property,  and  perhaps  be  used 


OF  DEMOCRACY. 


4i 


to  prevent  the  accumulation  of  immense  fortunes  in 
single  hands.  The  poorer  members  of  society  will 
eventually  discover  that  the  vast  property  of  the  mil¬ 
lionaire,  held  by  one  person  whose  wants  are  all  sup¬ 
plied,  would  if  held  by  a  hnndred  men,  full  of  yet  un¬ 
supplied  wants,  give  rise  to  a  demand  for  labor  and  its 
products,  and  their  distribution,  a  hundred  times  as 
great  as  it  does  in  the  hands  of  the  single  owner.  To 
offset  against  this,  however,  there  is  that  part  of  the 
millionaire’s  property  which  is  invested  or  loaned  for 
purposes  of  production  and  employment  of  labor.  If 
this  part  were  the  whole  of  it  except  that  which  sup¬ 
plied  his  ordinary  wants — wants  similar  to  those  of 
the  man  owning  ten  thousand — then  the  effect  would 
be  equal ;  in  other  words,  if  he  lived  like  the  man  of 
ten  thousand,  and  invested  all  his  unconsumed  capital 
and  income  in  useful  production,  it  would  make  no 
difference  to  the  working  man  who  might  be  the  tech¬ 
nical  owner ;  for  in  either  case  the  same  demand  for 
productive  labor  would  exist,  assuming  that  the  man  of 
ten  thousand  consumes  no  luxuries  and  makes  no  use¬ 
less  expenditure.  But  all  the  capital  sunk  in  unpro¬ 
ductive  expenditure,  for  purposes  of  ostentation  and 
luxury,  such  as  palatial  residences  and  grounds,  fast 
horses,  yachts,  etc.,  (except  in  times  of  distress,  when 
expenditure  for  any  purpose  may  be  better  than  none) 
is  a  waste  of  resources,  which  might  otherwise  be 
turned  into  the  channels  of  useful  production,  and  be  a 
means  of  increasing  the  property  and  the  comfort  of 
the  poorer  classes,  aiding  their  moral,  social,  and  intel¬ 
lectual  elevation,  and  contributing  towards  a  greater 
equality,  morality,  and  wisdom  in  all.  For  indeed  the 


42 


THE  POLITICAL  ECONOMY 


millionaire  is,  with  some  exceptions,  morally  as  low 
and  selfish  as  he  is  high  socially ;  and  for  the  purpose 
of  securing  his  own  best  happiness  is  really  no  wiser 
than  the  poor  ignoramus  who  serves  him  in  carrying 
out  his  “high-toned”  selfish  wishes. 

All  the  old  talk  about  the  expenditure  of  the  rich 
for  luxuries  being  a  benefit  to  the  poor  is,  in  ordinary 
times,  a  pure  swindle,  which  only  the  popular  ignorance 
upon  economic  subjects  prevents  from  being  seen  as  it 
is.  This  they  will  come  to  see,  and  also  the  fact  that 
all  those  who  serve  and  aid  the  rich  in  their  waste  of 
money  for  luxury  and  show  are  but  so  many  parasites 
supported  upon  what  has  been  indirectly  taken  from 
productive  labor  by  a  higher  cost  than  necessary  for 
everything  the  poor  man  consumes.  Eventually  it  is 
to  be  expected  the  men  of  labor  will  discover  that  para¬ 
sitism  of  every  kind  in  state,  church,  or  society  is  a  tax 
upon  what  they  produce,  an  abridgment  of  their  means 
and  comfort,  a  hindrance  to  their  improvement  and  hap¬ 
piness.  When  they  shall  have  learned  this  they  will 
probably  take  measures  to  limit  the  accumulation  of 
wealth  in  one  person’s  hands  to  a  reasonable  amount, 
thus  limiting  their  own  poverty,  and  limiting  the  ex¬ 
tent  of  general  servility  and  corruption.  One  of  the 
most  effective  of  such  measures  would  seem  to  be 
Graduated  Taxation. 

A  tax  of  this  kind  is,  moreover,  the  only  means  of 
compelling  the  rich  to  pay  in  proportion  to  their  ability, 
and  of  securing  real  justice.  The  man  who  owns  one 
thousand  dollars  is  not  as  well  able  to  pay  a  certain 
percentage  as  is  one  owning  fifty  or  a  hundred  thou¬ 
sand.  The  first  might  be  inconvenienced  or  deprived 


OF  DEMOCRACY. 


43 


of  his  wishes  to  a  considerable  extent,  the  latter  not  at 
all.  After  a  certain  amount  has  been  acquired,  suffi¬ 
cient  for  all  the  owner’s  reasonable  wants,  his  further 
acquisitions  may  be  taxed  enormously  and  still  he  will 
suffer  no  loss  of  anything  really  necessary  to  his  hap¬ 
piness.  Therefore  a  man’s  ability  to  pay  taxes  is  not 
in  proportion  to  the  total  amount  of  his  property,  but 
in  proportion  to  what  remains  after  exempting  a  cer¬ 
tain  amount  required  for  the  satisfaction  of  his  natural 
and  proper  human  wants. 

Still  further,  such  a  method  of  taxation  would  be 
advisable  as  favoring  industry  and  frugality  in  the 
poor ;  for  with  less  monopoly  of  openings  and  oppor¬ 
tunities  by  the  rich,  and  with  the  burden  of  tax  lifted 
till  the  time  they  became  able  to  bear  it,  they  would 
have  more  encouragement  to  labor  and  save. 

In  Education  the  popular  masses  will  find  their  ad¬ 
vantage  in  obtaining  less  of  that  instruction  classed  as 
learning,  or  that  which  is  considered  as  accomplishment 
merely,  and  more  of  that  which  is  scientific,  technical, 
and  useful,  which  will  prepare  them  to  fight  success¬ 
fully  the  battle  of  life,  and  including  the  industrial  Art 
that  will  teach  them  to  make  common  things  beautiful. 
There  is  something  to  be  said  in  favor  of  requiring 
every  child  to  begin  its  education  upon  an  equal  footing 
in  the  common  schools,  and  much  more  for  the  com¬ 
pulsory  attendance  at  school  of  all  under  fifteen  years 
of  age.  But  compulsory  education,  to  be  effective, 
must  be  enforced  by  officials  of  the  state,  for  apparently 
it  will  never  be  carried  out  by  local  ones.  It  is  doubt¬ 
ful  if  any  child,  however  rich  or  poor,  should  be  al- 


44 


the  political  economy 


lowed  to  grow  up  without  having  learned  the  rudi-  ■ 
ments  of  some  useful  productive  occupation.  Lack  of 
ability  to  get  a  living  in  honest  ways  is  the  most  com¬ 
mon  predisposing  condition  of  knavery.  In  Europe 
the  School  Garden  has  become  an  established  institu¬ 
tion  ;  the  School  Garden  and  School  Workshop  both 
will  not  be  too  much  for  America. 

The  criminal,  too,  must  be  educated,  and  the  pauper 
and  vagrant.  Sometime  it  may  dawn  upon  people 
who  are  not  lawyers  or  officials  that  the  only  rational 
purpose  of  penal  laws  and  prisons  is  to  reform  a  crimi¬ 
nal,  or  failing  in  that  to  put  him  where  he  cannot  prey 
upon  society.  It  is  admitted  that  he  needs  educating 
morally  and  intellectually ;  and,  without  bringing  his 
labor  into  competition  with  that  of  honest  men,  he 
should  be  taught  some  useful  trade,  or  more  than  one, 
adapted  to  his  capacities  and  tastes,  and  be  drilled  into 
permanent  habits  of  industry.  Whatever  his  crime  or 
the  now  usual  punishment  of  it,  a  second  offence,  and 
even  the  first  if  atrocious,  should  subject  him  to  this  edu¬ 
cational  prison  discipline,  without  hope  of  pardon  or  es¬ 
cape,  till  he  either  becomes  a  safe  and  useful  member 
of  society  or  dies.  There  is  no  way  to  exterminate  the 
criminal  and  pauper  classes  but  by  preventing  their 
propagation,  and  giving  an  industrial  as  well  as  mental 
education  to  every  child  without  exception.  While, 
behind  all  this  educational  preparation  there  must  be  a 
settled  public  conviction  of  the  low-lived  and  selfish 
character  of  the  aristocratic  feeling,  of  the  inherent 
disgracefulness  of  idleness  and  luxury,  of  the  necessity 
of  gaining  distinction  in  some  way  that  shall  be  useful 
to  mankind  ;  these  convictions  being  re-enforced  byj 


OF  DEMOCRACY. 


45 


the  impossibility  of  acquiring  great  riches  for  selfish 
indulgence.  There  is  superfluous  wealth  enough  in 
the  hands  of  the  extremely  rich  to  give  ten  years  of 
schooling  to  every  child,  and  to  make  scientific  knowl¬ 
edge  so  common  among  all  classes  that  disease,  poverty, 
and  crime  shall  be  substantially  abolished.  The  means 
for  effecting  this  change  has  been  already  suggested  in 
Graduated  Taxation. 

Of  interference  by  the  government  with  railway 
and  other  corporations ,  it  is  safe  to  predict  that  no 
more  of  it  will  be  done  than  is  positively  necessary. 
The  American  people  will  not  infringe  upon  any  one’s 
freedom  without  cause.  But  the  power  to  do  so  ex¬ 
ists  and  is  likely  to  be  used  when  protection  of  the 
people’s  interest  cannot  be  otherwise  secured.  There 
are  many  ways  in  which  the  power  of  a  great  corpora¬ 
tion  can  be  and  is  abused,  and  as  human  nature  is  in¬ 
herently  disposed  to  take  advantage  of  the  weak  and 
ignorant,  it  is  only  by  perpetual  vigilance  that  abuses 
can  be  prevented  or  corrected.  To  remedy  those  now 
existing,  and  the  evils  of  legislation  that  discriminates 
in  favor  of  the  rich  and  powerful  in  various  ways,  will 
be  a  work  of  no  little  magnitude  and  difficulty.  Ulti¬ 
mately,  there  is  reason  to  hope,  the  selfish  and  un¬ 
principled  rich  who  prey  upon  society  at  one  extreme 
will  become  extinct,  as  will  also  those  at  the  other  who 
are  incapable  of  improvement — methods  will  be  de¬ 
vised  to  prevent  the  piling  up  of  big  fortunes,  and  to 
prevent  the  children  of  crime,  if  not  crime  itself,  from 
coming  into  existence. 


46 


THE  POLITICAL  ECONOMY 


That  the  new  party  now  arising,  or  some  other  soon 
to  arise,  will  pay  attention  to  the  opposite  tendencies  in 
Political  Economy,  and  that  it  will  adopt  some  of  the 
most  important  practical  ideas  favoring  equality,  with 
a  platform  ever  varying  as  the  abuses  imposed  upon  the 
masses  are  discovered  and  new  reforms  instituted  in 
their  interest,  appears  decidedly  probable.  The  in¬ 
creasing  intelligence  of  the  laboring  classes,  the  grow¬ 
ing  interest  in  Socialism,  the  awakened  thought  of  all 
persons  upon  our  late  dangerous  social  condition,  to¬ 
gether  with  the  absence  of  moral  motive  in  the  pro¬ 
grammes  of  both  the  old  parties,  make  this  indeed 
almost  certain.  The  Greenback  issue,  as  the  main  one, 
even  if  it  were  sound  in  the  way  presented,  is  tar  too 
little  to  sustain  such  a  party  ;  but  as  a  true  working¬ 
man’s  party,  devoted  to  simple  justice  for  the  masses 
and  the  advancement  of  equality,  it  will  possess  moral 
motive,  and  have  sufficient  work  upon  its  hands  for 
many  years.  It  may  accomplish  a  political  revolution 
equal  in  importance  to  that  against  Slavery.  It  can 
extinguish  the  great  army  of  tramps,  that  fearful 
anomaly  in  our  social  life,  and  bring  about  a  moral 
renovation  equal  to  the  political.  It  may  do  as  much 
for  practical  human  freedom  as  any  party  or  movement 
that  has  ever  existed. 

The  idea  has  been  advanced  that  every  great  nation 
has  a  vocation  properly  belonging  to  it— a  purpose  in 
the  grand  scheme  of  human  destiny,  that  lies  behind 
it  and  constitutes  its  reason  for  being — a  peculiar 


OF  DEMOCRACY . 


47 


part  to  play  in  the  progress  of  the  race.*  If  I  might 
be  allowed  to  formulate  the  expression  of  this  destiny 
in  regard  to  ourselves,  I  would  say  that  the  American 

Vocation  is  to  be  the  Realization  of  Equality - not  an 

impossible  absolute  equality,  not  a  mere  dead-levelism  ; 
but  a  comparative  equality  of  high  grade,  such  as  the 
world  has  never  yet  seen,  that  shall  insure  to  every 
one  the  means  of  practical  freedom  and  control  of  his 
own  career,  with  a  capacity  to  appreciate  goodness, 
truth,  and  beauty  in  all  the  achievements  and  posses¬ 
sions  of  Humanity,  and  an  ability  to  make  the  best  use 
of  his  faculties  and  secure  his  greatest  happiness. 

In  a  natural  forest  a  grove  of  trees  grow  up  to¬ 
gether,  few  of  them  being  much  larger  than  the  rest, 
and  none  of  them  small.  The  underbrush  dies  out, 
and  the  common  soil  supports  as  many  of  them  as  can 
find  room  to  grow.  It  may  be  that  they  furnish  a  not 
unfair  symbol  of  human  society  in  its  approach  to  the 
perfect  state. 

* 

*  This  conception,  with  its  illustration  in  America  and  other  na¬ 
tions,  is  taken  from  an  article  by  John  Dyer,  in  the  Penn  Monthly  for 
July,  1875. 


Law  of  Justice 

- BETWEEN - 


Capital  and  Labor. 


PREFACE. 


The  little  essay  following  states  and  illustrates  a 
rule  that  is  applicable  in  every  kind  of  business  enter¬ 
prise  or  combination  of  capital  and  labor.  The  ar¬ 
rangement  contemplated  by  it  is  not  Cooperation,  of 
the  ordinary  type,  in  which  the  laborer  is  his  own 
Capitalist ;  nor  is  it  an  Industrial  Partnership,  in  which 
the  capitalist  and  manager  offers  such  a  share  of  the 
profits  as  he  may  choose  to  the  laborer,  more  as  a 
reward  to  faithfulness  than  as  a  matter  of  justice ; 
though  it  approaches  more  nearly  to  the  latter  in  not 
requiring  the  laborer  to  possess  capital.  It  proposes 
the  terms  that  Labor  may  offer  to  Capital,  or  Capital 
to  Labor,  as  the  dictate  of  strict  justice  between  them 
— something  which  either  can  offer  or  accept  with 
manly  dignity,  conscience,  and  good  feeling.  This 
claim  appears  like  one  to  be  scouted  as  soon  as  made, 
but  a  careful  reading  of  the  essay  will  show  it  to  be 
less  preposterous  than  it  seems. 

There  is  no  need  to  speak  of  the  importance  of  the 
idea  advanced  if  true,  nor  to  apologize  for  the  direct 
and  hasty  manner  in  which  it  is  presented,  at  a  time 
when,  in  regard  to  this  subject,  every  one  is  ready  to 
receive  an' idea  that  can  be  of  service,  in  as  few  words 
as  possible. 


The  Law  of  Justice 


—BETWEEN— 

Capital  and  Labor. 


POLITICAL  Economy  appears  not  to  recognize  that 
there  is  any  question  of  justice  between  Capital 
and  Labor,  other  than  that  of  the  just  fulfilment  of 
contracts  between  the  capitalist  and  laborer,  the  same 
as  in  any  other  kind  of  bargain  or  trade.  In  the 
common  view  the  purchase  or  sale  of  labor,  or  the 
mutual  exchange  of  service,  is  all  there  is  in  the  rela¬ 
tion,  and  therefore  it  ought  to  be  governed  by  the 
ordinary  laws  of  trade. 

Yet  it  is  possible  to  take  a  different  view  of  the 
connection  between  these  parties ;  to  look  upon  it  as  a 
kind  of  natural  partnership,  in  which  justice,  in  the 
proper  sense  of  the  word,  appears  to  have  an  applica¬ 
tion  according  to  an  easily  understood  principle  or 
rule.  I  shall  endeavor  to  state  in  a  concise  and  plain 
manner  what  I  conceive  this  to  be,  and  hint  at  some 
of  the  advantages  to  be  anticipated  from  carrying  it 
into  practice. 

The  principle  itself  is  so  simple  that  where  there 
has  existed  a  sufficient  motive  for  doing  justice  the 
method  has  been  at  least  partially  discovered.  In  the 
Cooperative  Stores  of  England  and  Germany,  a  rule 


52 


THE  LAW  OF  JUSTICE 


has  always  been  acted  upon  which,  so  far  as  applied, 
is  essentially  the  same  thing  ;  that  is,  dividends  to  each 
member  in  proportion  to  amount  of  purchases  made  by 
him — in  other  words,  in  proportion  to  the  amount  of 
profits  produced  by  each  one  through  Jus  purchases. 
The  assistance  given  by  capital  toward  the  common 
result,  if  taken  into  account  at  all,  is  considered  to  be 
sufficiently  rewarded  by  the  interest  allowed  to  it ;  and 
in  many  instances  the  small  amount  of  capital  required 
from  each  member  being  the  same — a  single  share 
Avorth  five  or  ten  dollars — there  w^as  really  no  need 
of  considering  Capital  in  distributing  the  profits.  It 
was  then  a  natural  and  easy  inference  that  profits 
should  justly  be  shared  in  proportion  to  amount  of  pur¬ 
chases. 

Carrying  the  same  principle  into  ordinary  Produc¬ 
tion,  in  which  profits  are  made  by  manufacturing 
goods  as  well  as  by  selling  them — by  labor  as  well  as 
by  trade ,  it  would  give  to  Capital  and  to  the  Laborer 
shares  in  proportion  to  the  value  of  zvhat  each  had  fur¬ 
nished  toward  the  production  of  the  profits .  Now,  the 
Laborer  furnishes,  not  himself,  but  the  use  of  himself, 
his  labor  or  services  for  a  given  time,  the  value  of 
which  is  measured  by  his  wages  or  salary — what  he 
earns.  Capital  furnishes,  not  itself,  for  it  is  supposed 
to  remain  unhurt  and  to  be  returned  without  loss,  but 
it  furnishes  its  purchasing  power,  its  convenience,  its 
use  or  service,  or  the  use  of  machinery  or  other  pro¬ 
perty  in  which  it  is  invested,  such  service  being  valued 
by  what  it  could  earn ,  that  is,  an  interest  of  six,  eight, 
or  ten  per  cent,  of  itself,  during  the  same  time.  The 
earnings  of  the  laborer  is  one  factor,  the  earnings  of 


BETWEEN  CAPITAL  AND  LABOR.  53 


capital — not  of  the  capitalist  himself — is  the  other. 
Or,  to  look  at  it  in  another  way,,  the  laborer  may  be 
considered  a  machine ,  the  use  of  whose  muscular  or 
thinking  apparatus,  or  both,  is  worth  a  certain  amount 
a  year — his  wages  or  salary.  The  use  of  capital  is 
worth  what  it  could  earn  if  the  use  of  it  were  given 
for  hire  in  any  other  business — that  is,  its  interest. 
The  laboring  machine  and  the  capital  are  both  sup¬ 
posed  to  be  returned  good  at  the  end  of  the  year. 
The  interest  of  the  capital  for  its  use  or  service,  and 
the  zvages  of  the  laborer  for  his  use  or  service  in  the 
joint  production,  should  then  divide  the  profits ;  the 
total  wages  and  the  total  interest  should  share  in  direct 
proportion  to  the  amount  of  each.  This  is  so  plain 
and  self-evident,  it  is  hardly  possible  to  doubt  its  jus¬ 
tice.  It  is  precisely  the  same  as  though  the  division 
were  between  the  interest  on  money  for  its  use  on  one 
side,  and  the  interest  on  the  value  of  a  machine  for  its 
use  on  the  other.  The  value  of  the  laborer,  when 
capitalized  like  a  machine  is  assumed  to  be  a  sum 
whose  yearly  interest  would  be  equal  to  the  yearly 
earnings  of  the  man. 

I  have  been  speaking  as  if  only  one  laborer  were 
concerned,  but  with  any  number  of  laborers  the  divi¬ 
sion  is  equally  simple.  Each  one  takes  a  share  of  the 
total  amount  assigned  to  Wages  in  direct  proportion 
to  the  total  amount  of  his  individual  wages,  or  salary, 
for  the  given  time ;  the  individual  salaries,  or  wages, 
being  considered,  as  is  commonly  the  case,  to  repre¬ 
sent  the  comparative  value  or  amount  of  each  one’s 
contribution  to  the  general  production.  The  rates  of 
wages  and  of  interest  are  taken  to  be  just  what  they 


54 


THE  LAW  OF  JUSTICE 


are  made  by  the  ordinary  action  of  Supply  and 
Demand. 

Machinery  (of  wood  and  metal)  and  buildings  are  a 
part  of  the  capital,  and  need  not  be  considered  separ¬ 
ately.  An  appropriation  for  the  wear  and  tear  of 
them  is  of  course  to  be  taken  out  from  the  total 
earnings  before  distribution,  that  being  a  loss  to  be 
repaired  before  the  net  amount  of  profits  can  be 
known. 

To  illustrate  the  working  of  this  law,  let  us  imagine 
a  small  factory  with  a  capital  of  $100,000,  and  an  opera¬ 
ting  force  of  fifty  hands.  It  does  a  good  year’s  busi¬ 
ness,  and  makes  a  net  profit  of  $10,000,  after  paying 
wages  to  the  amount  of  $40,000,  and  interest  to  the 
amount  of  $10,000.  Interest,  being  one-fifth  of  the 
whole  sum  paid  for  services  ($50,000),  takes  one-fifth 
of  the  profit,  or  $2,000.  Wages,  being  four-fifths,  will 
take  $8,000,  to  be  redivided  among  the  fifty  operatives 
in  the  ratio  of  each  one’s  yearly  wages.  Then,  if  we 
allow  the  superintendent  to  have  a  salary  of  $1,500, 
his  share  of  the  $8,000  will  be  $300.  If  four  others  have 
salaries  of  $1,000  each,  their  shares  will  be  each  $200  ; 
if  five  more  receive  $900  each,  they  each  take  $180; 
and  the  remaining  forty,  whom  we  suppose  to  have 
earned  $750  each,  will  each  have  $150. 

In  the  supposed  instance  the  amount  of  capital 
invested,  compared  to  labor,  is  large,  and  the  rate  of 
wages  and  interest  high  ;  but  these  are  of  no  conse¬ 
quence  to  the  application  of  the  principle.  The  greater 
the  relative  amount  of  capital  or  interest  involved,  the 
smaller  will  be  the  share  of  profit  coming  to  Labor  or 
Wages ;  the  smaller  the  relative  amount  of  capital,  the 


BETWEEN  CAPITAL  AND  LABOR.  55 


greater  the  gain  of  Labor.  But  whether  it  gives  to 
the  workman  or  to  the  capitalist  much  or  little,  the 
rule  is  strictly  just  so  long  as  we  allow  the  justice  of 
interest  to  capital,  and  the  right  of  men  to  buy  and 
sell  labor  according  to  Supply  and  Demand. 

To  see  its  justice  still  more  plainly,  if  possible,  let 
us  consider  everything  concerned  in  the  production  as 
capitalized — the  money,  the  land  or  buildings,  the 
machinery,  and  the  operatives.  The  laborer,  whatever 
he  may  be  in  any  other  capacity,  is  for  industrial  pur¬ 
poses  only  a  more  intelligent  machine  ;  and  it  is  the 
use  of  his  muscular  machinery  for  which  he  is  paid 
wages.  Then,  if  mo?iey  capital  is  worth  ten  per  cent, 
or  one-tenth  of  itself  per  year,  a  man  who  earns  $1,000 
a  year  wages  should  be  capitalized  at  $10,000,  or  con¬ 
sidered  as  equivalent  to  that  amount  of  stock.  His 
earnings  are  then  like  those  of  money  capital,  one- 
tenth  of  his  value ;  and  he  shares,  or  should  share,  the 
profits  in  the  same  proportion  as  if  he  had  furnished 
$10,000  money  capital  to  the  establishment  instead  of 
his  own  labor.  The  interest  of  that  sum  would  just 
pay  the  wages  of  some  other  equally  good  man.  That, 
then,  is  his  exact  value  as  human  capital,  or  as  a 
human  machine. 

Thus  closely  inspecting  the  nature  of  the  contribu¬ 
tion  made  by  the  laborer,  it  is  seen  to  be,  in  a  strict  and 
rigid  sense,  capital  (human  capital),  and  our  rule  of 
justice  thus  requires  a  division  of  profits  in  proportion 
to  amount  of  capital  furnished  by  each  party. 

On  the  other  hand,  considering  capital  to  be,  as  it 
really  is,  the  conserved  and  accumulated  force  result¬ 
ing  from  previous  labor,  performed  by  somebody,  then 


56 


THE  LAW  OF  JUSTICE 


the  same  law  gives  the  profits  to  each  party  in  pro¬ 
portion  to  the  amount  of  labor  invested  by  each.  For 
the  capitalist  who  invests  $50,000  (rate  of  interest 
being  as  above  supposed)  contributes  what  is  equal  to 
five  men  or  five  machines,  whose  annual  service  or 
labor  is  each  worth  a  rent  or  a  salary  of  $1,000. 

In  either  view  a  dividend  is  in  proportion  to  the 
amount  of  service  rendered  by  each  party  toward  the 
common  product  of  their  operations. 

[Some  of  the  terms  here  used  will  not  sound  pleas¬ 
ant,  they  may  suggest  reminisences  of  slavery ;  but,  if 
they  express  the  actual  truth,  we  may  as  well  get  used 
to  them.  The  hired  laborer  is  to  some  extent  a  slave 
in  his  present  condition ;  if,  by  understanding  his  real 
nature  and  position  as  a  laborer,  we  can  help  to  make 
him  more  free,  it  is  not  best  to  quarrel  with  the  terms 
that  give  us  a  true  conception.] 

A  loss  is  to  be  shared  in  the  same  manner  as  a 
profit.  A  loss  only  great  enough  to  prevent  the  pay¬ 
ment  of  part  of  the  interest  can  be  equalized  by 
witholding  part  of  the  wages  till  the  end  of  the  year, 
or  time  of  settlement,  and  then  making  such  a  dis¬ 
tribution  that  Wages  shall  lose  the  same  percentage  as 
Interest. 

An  impairment  of  the  money  capital  is  to  that  pre¬ 
cisely  what  damage  is  to  a  machine,  or  what  accidental 
injury  is  to  an  operative.  Whatever  method  is  advis¬ 
able  to  secure  against  one,  is  equally  proper  to  secure 
against  the  other.  If  the  worker  is  to  risk  the  loss  of 
his  limbs  or  his  life,  the  capitalist  can  afford  to  risk  the 
loss  of  his  money.  If  the  latter  is  to  be  insured 
against  loss,  the  former  should  be  insured  against  un- 


BETWEEN  CAPITAL  AND  LABOR.  57 


avoidable  accident.  But  as  it  is  impracticable  in  pay¬ 
ing  wages  to  obtain  a  return  of  any  part  of  it  to 
meet  losses,  and  even  difficult  to  withhold  a  part  of 
it  very  long,  it  seems  decidedly  the  most  simple 
and  efficient  method  to  provide  a  contingent  fund  from 
the  receipts  of  prosperous  years,  to  insure  against 
losses  of  all  kinds,  including  accidents  to  operatives 
and  wear  and  tear  of  machinery  or  plant.  This  is  the 
method  actually  adopted  by  some  of  the  industrial 
partnership  establishments  to  provide  against  some  if 
not  all  of  these  losses.  In  this  manner  Interest  and 
Wages  bear  each  its  just  proportion  of  the  loss;  and, 
taking  a  series  of  years  together,  that  loss  falls  equit¬ 
ably  or  in  proper  ratio  upon  all  the  individuals  con¬ 
cerned. 

A  reduction  or  rise  in  wages  justly  implies  a  cor¬ 
responding  reduction  or  rise  in  the  rate  of  interest, 
and  vice  versa ,  with,  perhaps,  slight  modifications 
caused  by  natural  variations  in  prices. 

Justice  would  also  give  to  a  workman,  whose  labor 
is  unhealthful,  dangerous,  or  very  severe,  a  rightful 
claim  to  an  allowance  for  wear  and  tear,  unless  the 
compensation  be  made  by  a  higher  than  ordinary  rate 
of  wages. 

That  the  workingman  who  is  unwilling  to  take  any 
risk  or  share  in  any  possible  loss,  has  no  right  to  claim 
a  share  in  profits  will  be  at  once  admitted. 

As  to  the  results  to  be  anticipated  from  the  adop¬ 
tion  of  this  standard  of  justice  in  practice,  I  cannot 
but  believe  it  would  give  to  the  workingman  some¬ 
what  more  than  the  industrial  partnerships  have 


58 


THE  LAW  OF  JUSTICE 


usually  done,  but  not  as  much,  of  course,  as  true  co¬ 
operative  production,  in  which  he  furnishes  his  own 
money  capital  and  receives  all  the  profits.  If  justice 
and  good  feeling  can  do  anything  toward  success  in 
business,  as  already  they  appear  to  do  in  certain  cases 
where  partially  brought  out,  then  this  ought  to  pro¬ 
duce  good  results  to  both  Labor  and  Capital.  The 
laborer  has  under  it  every  inducement  to  do  his  best 
for  the  prosperity  of  his.  employer.  The  employer, 
with  improved  prospects  of  success  from  the  hearty 
co-operation  of  the  workman,  has  a  reasonable  assu¬ 
rance  of  a  good  interest  on  his  capital,  and  a  share  in 
the  gains  on  account  of  that  interest.  If  he  is  also  the 
superintendent  of  his  business,  he  has  an  additional 
share  of  profit  on  acconnt  of  his  salary  as  his  own 
employe. 

The  history  of  modern  efforts  at  Co-operation  or 
Association  in  industry,  in  various  ways,  seems  to  me 
to  show  that  those  arrangements  called  industrial  part¬ 
nerships,  in  which  the  proprietor  or  capitalist  controls 
and  manages,  while  allowing  to  his  employes  a  small 
share  in  the  profits,  are  the  most  natural,  because  most 
successful,  first  steps  toward  harmonious  co-operative 
production.  The  law  here  explained  also  seems  to  me 
to  furnish  the  true  guide  for  conducting  such  arrange¬ 
ments. 

The  only  real  and  valid  objection  I  am  at  present 
able  to  see  to  this  standard  of  justice  is  that  might 
makes  right — that  Nature  and  Society  give  to  the 
capitalist  a  right  and  power  to  take  advantage  of  the 
necessities  of  a  man  so  poor  that  he  is  obliged  to  sell  his 


BETWEEN  CAPITAL  AND  LABOR.  59 


labor  on  any  terms  he  can  get,  and  to  withhold  from 
such  a  one  that  which  neither  Nature,  Society  nor 
Justice  allows  him  to  withhold  from  one  who  is  able 
to  sell  his  labor  or  refrain  from  selling  it,  as  he  chooses. 

An  objection  will  arise,  however,  to  the  effect 
that  the  manufacturer  who  acted  upon  it  would  be 
unable  to  compete  with  one  who  did  not.  This,  I 
believe,  is  apparent  only,  not  real.  In  this  case,  let  it 
be  observed,  it  is  not  the  employer  alone  who  is  to 
make  the  struggle  against  competition.  His  men  are 
as  much  interested  in  meeting  it  as  himself.  The 
esprit  du  corps ,  and  the  common  interest  and  sympathy 
of  all  engaged  are  brought  to  bear  in  a  united  effort 
to  overcome  opposition.  Such  being  the  state  of  feel¬ 
ing,  the  whole  amount  of  profits,  or  what  would  other¬ 
wise  be  profits,  is  allowed  to  go  for  this  purpose,  and 
interest  and  wages  also,  as  far  as  the  parties  think  it 
advisable  to  sacrifice  them.  And  if  we  suppose  an 
establishment  having,  by  successful  business  for  a  few 
years,  acquired  a  considerable  reserve  fund  for  con¬ 
tingencies  and  extraordinary  expenses  of  any  kind, 
necessary  or  advisable,  then  here  is  another  means, 
greater  or  less,  for  meeting  a  sharp  competition. 

But  assuming  the  more  helpless  situation,  in  which 
there  is  no  such  fund,  we  may  also  assume  that  the 
workmen  are  to  be  employed  permanently,  one  year 
after  another,  and  that  the  capital  likewise  is  perma¬ 
nently  invested,  or  at  least  that  this  is  the  intention  in 
regard  to  both.  Then  a  reduction  of  wages  and  in¬ 
terest  to  guard  against  anticipated  difficulty  from  com¬ 
petition  ought  to  be  practicable  and  easy.  Each  party, 
capitalist  and  laborer,  acknowledges  the  justice  of  re- 


6o 


THE  LAW  OF  JUSTICE 


ducing  interest  and  wages  in  equal  ratio — one-tenth, 
one-fifth,  or  more,  of  each  as  the  case  may  demand. 
The  laborer  knows  that  no  advantage  is  to  be  taken  of 
him  ;  that  if  a  profit  is  thus  allowed  to  be  made  which 
would  not  be  possible  with  the  payment  of  high  wages, 
he  will  share  in  it  equitably  whatever  the  amount  ; 
that  he  really  gets  from  profit  and  wages  together  the 
same  sum  he  would  otherwise  receive  with  a  higher 
rate  of  wages  and  interest  but  no  profit,  and  gets  it 
without  causing  danger  or  embarrassment  to  the  busi¬ 
ness.  He  further  knows  that  the  next  year  or  series 
of  years  will  make  up  to  him  what  he  loses  in  this ; 
that  as  a  permanent  arrangement  it  is  the  best  he  can 
make.  Knowing  all  this  he  cannot  oppose  reduction 
to  any  extent  necessary,  provided  it  leaves  him  suffi¬ 
cient  to  live  upon  as  he  goes  along.  The  capitalist, 
knowing  the  reduction  of  interest  to  be  equally  just, 
and  that  what  it  falls  below  the  average  in  one  year  is 
made  up  in  another,  will  be  no  less  ready  to  give  it  his 
consent. 

Furthermore,  the  manufacturer  operating  on  this 
principle  has  a  great  strength  from  the  complete  and 
thorough  satisfaction,  sympathy  and  good  will  of  his 
men.  His  competitor  acting  on  the  common  plan, 
though  he  may  sometimes  secure  a  temporary  advan¬ 
tage  by  having  all  the  profits  he  can  make,  yet  finds 
his  gains  materially  lessened  by  the  unfaithfulness  of 
his  workmen — h>y  inferior  and  damaged  goods,  by 
breakage  and  waste  from  carelessness,  by  killing  of 
time  and  stealage— by  all  kinds  of  dishonest}'.  On  the 
other  hand,  the  acknowledgment  and  acceptance  of  a 
just  principle  by  the  employer  develops  honesty,  care, 


BETWEEN  CAPITAL  AND  LABOR.  6t 


faithfulness  on  the  part  of  the  employe,  and  an  in¬ 
terest  in  the  common  success,  which  not  only  prevent 
these  losses,  but  increase  his  actual  skill  and  power, 
and  the  amount  and  quality  of  his  product.  This  good 
feeling  and  unity  of  interest  is  already  acknowledged 
to  be  an  important  element  in  the  production  of  profits 
by  the  existing  industrial  partnerships.  Yet  those  ar¬ 
rangements  concede  only  partial  justice  to  the  laborer, 
and  an  institution  governed  and  guided  by  a  rule  that 
does  complete  justice  to  all  would  derive  a  still  greater 
advantage  from  the  more  perfect  harmony,  unity  of 
effort,  and  faithfulness  of  all  concerned. 

It  may  also  be  said  against  this,  as  against  any 
proposal  of  a  similar  nature,  there  is  danger  that  those 
holding  the  power  given  by  capital  may  break  up  the 
arrangement  when  it  may  suit  their  temporary  interests 
to  do  so,  and  that  the  laborer,  having  reaped  the 
benefit  of  good  times,  may  desert  at  the  coming  on  of 
bad  ones ;  though  such  conduct  in  either  would  be 
short-sighted  and  foolish  as  well  as  base.  This  danger 
creates  the  necessity  for  some  prudent  investigation  of 
the  characters  of  parties  before  entering  into  an  agree¬ 
ment.  And  after  all  it  must  be  remembered  that  just 
principles  can  be  carried  out  only  by  people  who  have 
some  sense  of  justice,  and  a  permanently  wise  ar¬ 
rangement  only  by  those  who  have  some  degree  of 
sagacity.  The  unprincipled  and  foolish,  among  both 
employers  and  workmen,  will  go  on  in  the  old  discor¬ 
dant  and  selfish  way,  each  taking  advantage  of  the 
other  at  every  opportunity.  The  capitalists  who  really 
desire  a  better  understanding  with  workingmen  and  a 
better  plan  for  conducting  operations,  manufacturers 


62 


THE  LAW  OF  JUSTICE 


whose  sympathies  impel  them  to  continue  work  at  a 
loss  rather  than  throw  their  help  out  of  employment, 
mechanics  who  with  a  little  capital  have  the  intelli¬ 
gence  and  honesty  to  combine  their  means  and  be  just 
to  each  other — men  who  value  peace,  harmony,  safety, 
and  general  happiness  as  well  as  money — these  are  the 
ones  to  initiate  the  method  of  doing  business  accord¬ 
ing  to  a  just  principle,  and  by  its  success  demonstrate 
the  right  way  to  avoid  the  existing  discord  between 
Capital  and  Labor. 


I  have  called  this  rule  of  distribution,  justice  ;  but  I 
do  not  mean  that  absolute  justice  which  was  taught  by 
Josiah  Warren,  and  embodied  by  him  in  the  doctrine 
of  “  Cost  the  Limit  of  Price  ” — a  doctrine  that  is  yet 
to  make  his  name  immortal.  Sometime  in  the  future, 
when  capital  and  talent  shall  both  have  become  moral¬ 
ized  and  devoted  to  the  service  of  Humanity  rather 
than  Self,  we  shall  be  able  to  buy  and  sell  at  cost, 
giving  equal  labor  for  equal  labor  in  every  transaction. 


